Idle Hands Make for Tweeting Fingers

I can’t help but make the connection between Chinese Internet and a Fisher Price toolkit. Those bright shiny hammers and screwdrivers might look like the real deal, but the heavily censored Chinese Internet, just like the plastic choke-proof toys, won’t ever be able to build the framework of a free society.

In fact, China’s censorship of Facebook, Linkedin and Twitter, along with service interruptions for Gmail is reminiscent of many a fallen repressive Middle East regime. Aimed at crushing the public’s ability to organize protests and express dissent, China’s web-censoring arm – affectionately dubbed the Great Firewall – has garnered massive foreign media attention. But should we expect the Chinese citizenry to overthrow the Beijing government in the coming months?

Probably not.

Although the governments of Tunisia, Egypt, and China equally despise dissent, the Middle East differs from China in a key area: money. While the Middle East (along with most of the world) has suffered from the Great Recession, China’s economy has continued to grow at incredible rates. Protestors in Tunisia and Egypt weren’t just angry about civil-rights violations; many could no longer tolerate living in poverty. It’s this key difference that will make any sort of widespread revolt in China unlikely.

I don’t mean to suggest the Chinese population will give up free speech entirely for the ability to buy cups of Starbucks coffee and Nike shoes. But because China is economically stable and continuing to grow, the Chinese people will tolerate more censorship than their counterparts in the Middle East.

Sounds bitter or dismal? Maybe. But let’s take a step back and see that money has been at the center of many previous rebellions. America’s revolution started because our founding fathers refused to pay some taxes. The South seceded out of fear of losing the free labor of slavery. The US involvement in the Middle East in recent decades has stemmed from our desire to secure resources.

Good or bad, in the world in which we live, cash is king. And Beijing knows. Beijing, by focusing on economic progress and leading China’s workforce towards economic advancement, has sidestepped civil rights in favor of ‘looking to the future.’ The government believes that so long as the population continues to improve its economic position, the masses are unlikely to revolt.

In my last op-ed, I talked about the nearsightedness of US politicians in their poor handling of current budget deficits. Although detrimental to the long-term health of the US economy, Beijing doesn’t exhibit this type of economic myopia. However by focusing solely on economic development, Beijing demonstrates unprecedented levels of tunnel vision. But for their current goals, the strategy works. Dissent and opposition extend decision-making processes and prevent unilateral actions. However ignoring civil rights and denying people the ability to speak freely will likely bring about harm for China in the future. The question remains about what type of harm China’s government can expect and when they can expect it.

As it stands, the most visible opposition for China’s stringent Internet censorship programs come from abroad (with Chinese citizens unable to vocalize their opinions, this shouldn’t come as a surprise). In a recent speech, Hillary Clinton expressed US’s official view on internet censorship: “The United States continues to help people in oppressive Internet environments get around filters, stay one step ahead of the censors, the hackers and the thugs who beat them up or imprison them for what they say online.” This clear attack on China’s current practices led a Chinese spokesperson Ma Zhaoxu to declare that China opposes “other countries using Internet freedom as a pretext for interfering in others’ internal affairs.”

China calmly appears to refuse to listen to foreign governments. And I’m doubtful that’s going to change anytime soon. With ever increasing wealth and political clout, China is poised to do as it pleases (for the time being) without regard to internal or foreign dissent.

A Socially Conscious Business is still a Business

I’ve been struggling to get my head around (and approve/dismiss) the concept of socially conscious businesses for a while. Socially conscious businesses are those who claim to conduct business and sell products in a way that does not negatively impact consumers, employees, and the environment. All right seems nice, but what does that entail? How are these businesses able to improve working conditions and manufacturing processes (adding to a firm’s costs) while still selling goods at prices consumers will pay? Business won’t exist for long if they aren’t making a profit. In Wealth of Nations, Adam Smith sums it up perfectly: “It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest.” Companies cannot act altruistically and sell products at market price (below their cost). Well turns out they don’t have to remain competitive in price compared to others, and economics can tell us why.

Consumers across the market for a product are believed to have unique (yet sensible) preferences. More is preferred than less, and cheaper is better than more expensive. However consumers will pick the cheapest good only when the goods are completely identical. This is hardly ever the case; laundry detergents have different brands, car models have varying features, and televisions come in different sizes. The above lists examples of differentiated products. Just as many consumers prefer Tide to generic detergent, shoppers can be led to purchase a more expensive item as long as they believe the pricier item contains more value. Value can come in a variety of forms: better quality, more appealing packaging, assumed reliability, and even satisfaction from purchase. Providing consumers with self-satisfaction is the key to socially conscious business. Socially conscious businesses won’t be able to sell their products if consumers are unaware of the philanthropy that the product brings to the world. Those businesses wishing to sell their goods (with purported added value) must therefore 1) make consumers aware of the difference between their product and that of their competition and 2) appeal to buyers such that they will select their product over others’.

The problem with socially conscious businesses is measuring consumers’ additional satisfaction from purchasing the differentiated, generally higher-priced product. How much will consumers pay to go to bed feeling like they changed the world? Will coffee drinkers spend $10 extra on free-trade products knowing that farmers are bargained with fairly? Economists can attempt to model consumer preferences to predict the ‘sweet spot’ to price a good, but not accurately. Therefore, socially conscious businesses should attempt to loudly make their intentions known and keep costs as low as possible.

 

Myopia Isn’t Just an Eye Condition

Since the economic crisis in 2008, governments have struggled to balance budgets, and many have cut spending across the board in an effort to regain financial health. While these attempts at fiscal responsibility have quieted some taxpayers, they are ultimately quick patch jobs that do more harm than good. Seeking reelection in the near future, deficit-hawk politicians aim to give voters what they want at this instant instead of using the brains we believed them to have upon election to develop a long-term strategy to improve America’s economic prospects. Just as Mr. Magoo required thick eyeglasses to see anything beyond his nose, politicians today exhibit dangerous amounts of myopia that if left uncorrected will derail America in the decades to come.

First let’s talk education. The crown jewel of human capital investment now faces a dramatic decrease in spending. Classroom sizes are up and American students are not competitive with their peers in other industrialized countries. Though education often suffers dramatic cuts in rough times, this should not be the case. Education is the lifeblood of industrialized societies. Without strong education for all, fewer innovations may be realized, and the entire workforce of the future will be less skilled (and paid less in today’s dollar).

From the politician’s viewpoint, slashing education spending is an easy fix. Primary and secondary students can’t vote, and the negative effects of decreased budgets are not immediately felt. Additionally, by the time America suffers because of a less-educated citizenry, someone else will be in office.

Healthcare marks another crucial investment opportunity for the government. Just as much part of human capital as education, healthcare is pivotal for the long term -ahem- economic health of the US. Healthcare cuts oftentimes encompass things that reduce costs today but produce significant future financial burden. Take preventive care. Offering services to Americans to prevent disease or future illness seems like a logical enough thing. But preventive measures are often the first to go. Preventing future disease does nothing to improve people’s positions today, so the eyeglass-less politician says. Many of the drawbacks of cutting preventive healthcare measures will not be realized for many years. However when those costs come about, they will be drastically larger than the costs associated with administrating preventive care. Preventing an illness or detecting one at the onset (and treating it) saves significant costs for the government.

But tomorrow (or rather the day after tomorrow) is of little concern to today’s politicians. They believe that cuts of any kind, other than defense, must occur today and must occur in huge quantities. They couldn’t be more wrong.

But can you blame them?

Despite these politicians making drastic, foolhardy budget reductions, they’re just acting to gather votes for future elections. As much as I’d like to bemoan the politicians’ actions, maybe we should focus our anger on voters.

Voters, like all of society today, demand everything and demand it now. We live in a world in which we expect things to happen almost instantaneously. Corporate executives are rewarded for quarterly performance (not long term strategy), Twitter can cause a revolution overnight, and viral videos can garner millions of views within hours of their release. Information is widely available to us today in ways that previously were impossible. As a result, the public expects politics to keep up.

But just as your father always said, some things in life are worth waiting for. Not that waiting by itself is a good thing, but there’s value in spending time devising thoughtful actions. Although politicians and impatient voters believe that the current budget deficits must be conquered at this instant, we need to realize that budget deficits aren’t going anywhere until the economy improves and the government can collect higher tax revenues.

So instead of cutting funding to programs that will contribute to future economic improvement, let’s put on some corrective glasses, spend wisely and develop a plan to protect our economic future.