Thursday assorted links

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President Captain Bolsonaro, Brazil's new leader, has recently been awarded a award given to military people who risked their lives for a good cause. It has been revealed that, in 1978, he saved a soldier from drowning. This sums up nicely the moral difference netween Brazilians and Amsricans: Brazil has elected national hero, America has elected a reality show star. Brazil admires and rewards grit, courage, moral integrity and idealism, Americans admire and reward selfishness, narcissism and dishonesty. While Trump supports Red China and the Arabs, President Captain Bolsonaro takes a bold stand against them.

Your comment is irrelevant to the post and nakedly attempts to provoke cultural warfare in the comments section.

I think that neatly sums you up.

Not in the least.

Yes in the most.

Not really.

Go away you fraud.

I should stay.

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Nonsense. He is exercising his right to free speech. Only a fascist like you would try to censor him and take away his human rights.

Yes.

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A friend of mine who's on his second Brazilian wife says that in Brazil the women you talk to in bars will think you're "gay" if you don't very quickly go for their breasts, but that it's much harder to pick up Brazilian women in bars in Florida.

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2. The biggest loss in IP is not Disney movies being pirated in China, but engineering and technological designs stolen through blatant copies, state-sponsored economic espionage and hacking. This stolen IP directly impacts the value of American companies by allowing low-cost competitors to emerge unfairly (even if the IP couldn't be sold if theft wasn't a possibility).

Scott's argument is poorly framed, though he does have a point that this probably accelerated overall growth in the long run, and that we need better data to properly discuss this topic.

Hear, it is the world's smallest violin. Americans have been hoisted with their own greed. They have supported Red China's totalitarian regime so America's 1% could make lots of money.

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This stolen IP directly impacts the value of American companies by allowing low-cost competitors to emerge unfairly (even if the IP couldn't be sold if theft wasn't a possibility).

Even more alarming: a lot of the valuations out there are based on artificial scarcity of IP legal regime.

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The biggest? Has someone done a classification and quantification?

I can see a few classes:

* China uses open source hardware and software, and doesn't honor the GPL.

* China reads US patents and uses them without compensation.

* China negotiates technology transfer in foreign partnerships.

* China straight up buys foreign companies and their IP.

* China hires Chinese graduates of US universities trained in "our" knowledge.

* China breaks into US computers and straight up steals files.

When you are trying to lift a billion poor some of these don't look so bad. I made the joke "Utilitarianism with Chinese characteristics" in the previous thread for this reason.

But where you draw the line will depend on how utilitarian you are, and how Chinese you are.

China does this and China does that. China does nothing. People, maybe in China, maybe somewhere else, do different things. Some of which other people don't like.

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I forgot plain old-school reverse engineering.

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Do you have a specific example of a low-cost competitor to an American company that has garnered a significant market share based on copied designs?

I know there are cheap Chinese clones out there. But how much market share do they really have? In one case, I believe the Chinese clone actually improved on the original by fixing a bug in the Apple firmware they were copying.

HuaWei (tel & cellular), Norinco (engineering), CIMC (China Int. Marine Container), ASGE (endoscopy/medical devices), CSR Sifang (transport tech - rail)….

In the case of CIMC, they have 49% global market share....

The list goes on.

What did they steal, exactly? I mean, does Huawei copy the circuitboard and clone the firmware of an Apple iPhone? Or are we talking about "look and feel" or "pinch-zoom" ?

Not Apple, Android and google firmware.

You chose a tricky one, because it take some expertise to name what parts of Android and Google firmware are open source and which are not.

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Huawei was sued by Cisco for straight-up code theft. They stole Cisco's IOS source code and used it in their own products with a couple cosmetic changes. You could tell it was the same code because it had the same obscure bugs.

The lawsuit ended when Huawei dropped the product line, but Huawei admitted in court one of their employees was stealing code from Cisco.

I was involved in evaluating some third-party networking gear for rebadging during this time period. My first comment after I got my hands on the Huawei was "We need to talk to legal about this one" because it was so blatant (case in point, it had CLI support for EIGRP, which is a Cisco proprietary protocol).

This is nowhere near an isolated incident. Just that most of it doesn't get heard about outside the tech community involved in the area.

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I bought a Norinco bb-gun once. Not real high-tech.

I will add American Superconductor, whose Chinese partner stole its software for controlling wind turbines. This enabled the Chinese company to sell wind turbines in China and in other markets. American Superconductdor was nearly destroyed. Google "American Superconductor" and "China" and you can read several articles about this.

That one is legit, with a conviction, yes.

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Norinco and its subsidiaries have stolen process and computer control technology for advanced machining. They also stole sintering tech from GKN in 2016. The sintering (laser-cladding) theft is especially egregious, as most experts expect further refinement of that technology to be strategically critical for 21st century aerospace applications.

I tried some searches on these. I didn't find solid stories, and nothing that supported the claim up above, that "The biggest loss in IP is [..] engineering and technological designs stolen through blatant copies, state-sponsored economic espionage and hacking. "

We have a big open society here, and while cyber crimes are (1) bad, (2) should be policed, and (3) prevented, I'm not sure I buy that they are "the biggest loss" in technology transfer.

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I'm not going to argue with all of these. I'm honestly curious about what IP theft stories there are. The thing is it's completely unclear from media reports how much of it is legit outright copying of designs vs. reverse engineering, vs. "look and feel", vs. video piracy vs. using Mickey Mouse images without paying royalties. And it's also unclear how much impact it has on US markets vs. world markets vs. Chinese markets.
I have no doubt there are cases where some Chinese companies straight up lifted designs of patented devices and copied them one-for-one, but I'm not sure that's what's happening with the listed companies.

In the case I mentioned above, the proprietary software was downloaded by an employee in the company's Austrian subsidiary. He was bribed with money and prostitutes.

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https://www.wsj.com/articles/china-maneuvers-to-snag-top-secret-boeing-satellite-technology-1543943490

China Maneuvers to Snag Top-Secret Boeing Satellite Technology

Export control and IP are two different things.
It's already incredibly illegal to leak export controlled technology to China - the penalties include prison time.

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And who knows, maybe some of this "IP Theft" is just taking advantage of #openscience.

From my experience, it manifests in a few different ways.

One: the government says full stop, if you want to sell in China, it must be through a JV, and they will have access to your trade secrets.

Two: If you want to sell in China, you’re going to produce in China. Where your ability to keep your trade secrets safe is zero (even if the JV is trustworthy). They can see whatever they want to see once you’re forced to produce there. And send it to SOEs.

Three: Blatant IP theft through hacking or industrial espionage.

Four: IP laws will not be enforced. This one is where I roll my eyes. We are well past the point of ideal IP enforcement.

1-3 are real. 4 is a big shrug to me.

Also 4 becomes even less meaningful if 1-3 stop.

OTOH, who cares. We don’t need to make stuff in this country except for some supply chain risk mitigation. Even then, make it in Mexico, where you can pay $2 an hour.

Yes, China will eventually have access to all communications within the US. Won’t be a big deal unless you make it your business to piss off the communist party of China.

The US should be the tech sector of the world, but it doesn’t need to specialize in hardware. Services is where the money is anyways. And rich Chinese do everything in their power to evade capital flight laws and invest in American assets.

Massively expand EB5. Creates huge capital inflows. Who cares if China makes all the things if all their money gets invested here? Real estate and US listed companies will rise in value. Sounds good to me.

What’s the downside ?

Downside is that if you do not (mostly) enforce IP laws, why would a company pay to develop it?

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"Real estate ... will rise in value. ... What's the downside?"

Housing becoming unaffordable to non-wealthy citizens and immigrants is a concern, just look at Vancouver, where Chinese capital taken from abroad has made much of the city unaffordable to Canadians. Or London, where foreign investors from around the world have made the city less and less affordable to British nationals.

From whom did the Chinese purchase the Vancouver property? Are you saying that Canadians should only be able to sell their property at a certain price or only to certain people?

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We also don't discuss the extent to which carbon tax and green policies in the West have boosted pollution producing exports from China. A very big part of the increase in Chinese exports over the last 10-15 years has come from dirty exports according to Beida researchers.

Yes. America’s $0 carbon tax is the reason manufacturing is offshoring from the US to China.

I'll treat this seriously. The USA does have gas taxes as well as CAFE as well as subsidies to electric cars. These and other environmental regs have a similar effects as carbon taxes. So keep your snark for your ignorant confreres.

So your theory is that gas taxes in the US, and hilariously irrelevant CAFE standards make an impact on our manufacturing output?

No. Environmental regulations you may be right, that is a significant cost. But compared to the labor rate differential it’s nothing.

Where I would agree with you would be in starting new plants. About 1000x easier. America makes it almost impossibly terrible.

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Good links today

#1 The Frenemies section...so true. Institutions that can't separate personal from operational squabbles don't last long.

#2 Process theft of photolithography of silicon wafers and recently 5-axis machining. Yes, $1 trillion if not more. Sorry Scott, the damage done by Chinese corporate espionage is profound. Not just in lost business to China, but also in lost business around the world when the Chinese competitor can now underbid its US, Canadian or EU competition.

#3 LoL she hasn't been arrested...yet. But she will be! Hahahaha.

#4 It's not for some but for most, sadly yes. I've always been please that Tyler's writing - at least for me - falls in the former category.

#5 In other news moviepass announcing most of it's customers are also 65 or older. Future moviepass subscriptions will henceforth be sent with AARP junkmail, making it thick enough to keep you from shredding it on sight

Hey, thanks. I glossed over 1 for the title. It was your comment that nudged me to enjoy a decent piece about organizational dynamics with fresh analogies.

Yup, I probably would not have clicked on 1 except for these comments. Definitely worth the read. Tyler has repeatedly mentioned how rock and roll bands are interesting case studies in management.

The article could've mentioned The Ramones. The outstanding documentary "End of the Century" revealed that most of the members didn't get along with each other. I suspect that they stayed together because they pretty much had no alternative, no other way to make nearly as much money (I'm guessing that they didn't make huge amounts anyway) nor as good music except by staying in The Ramones.

In some cases they hated each other's guts, in particular Johnny Ramone had an f-you attitude toward the others and they viewed him as a dictatorial a-hole. Which he probably was, but he seems to have played much the same business role that Mick Jagger did with the Rolling Stones: he alone in the group had the mentality to keep the group organized, to make and keep business deals, to pay attention to financial matters, and to be willing to order the other members around to make sure they complied.

Which isn't to say that that's a good managerial model. But without Johnny Ramone playing that role, The Ramones would probably have lasted fewer years than the Beatles did, instead of lasting over two decades.

Left largely unexplored in the article is the question of, when we compare the briefer but productive career of the Beatles, to the longer career of the Stones (who also had their productive period but more years of re-hashing than of productivity), is it really better to opt for the long career? The Ramones probably had no choice but to stick together. The Beatles could go their own way, and may've been the better for it. The Stones may very will have made the optimal choices for them, but if the Beatles had somehow forced themselves to say together for 50+ years, I don't know that they and we would've been better off.

Ha! Thanks for that.
It made me think of Yes. Chris Squire once said, in reference to a suit over the name, that 'Yes' was like a bus: people get on, people get off, but the bus keeps rolling. I don't agree (Anderson partisan/Wakeman fan). But there is a sliver of truth to it and it is even more true of King Crimson. So, yet another org type in bands is institution that survives wholesale changes in personnel. Kind of like the Catholic Church (itself responsible for some pretty good music). That type is in the long tail for sure, though.

Right (I would say "Yes" but that might be confusing). Some groups are more of a brand name, such as the groups that you mentioned, or the Yardbirds. And even more so in classical music, it's certainly the model of say the Berlin Philharmonic and the London Symphony: musicians come and go, but the group lives on.

At the other extreme, if you're Elvis Presley then there are no intra-group squabbles to deal with. You might still want to establish a long-lived brand name but there's never any question about leaving the group, you're either Elvis or you're not.

I'd guess that most rock groups have only a little interest in creating a long-lasting brand that lasts beyond their involvement. If they break up, that's the end of the group, a la The Beatles. Or Crosby, Stills, and Nash.

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I had not actually read the SCMP for a decade, even back then it had become a parody of itself, but now having read about five pieces in it this week I can say it is heading toward Far East Economic Review levels of degradation. But then with the current climate in HK it is probably too much to ask to hold it to the standards of the Deming Headlight.

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#2

Dr. Sumner clearly discounts the experience of foreigners less than the median voter/opinion holder (of any country), hence his "gut" reaction of excusing Chinese IP theft.

However he confuses many issues together, and does a poor job explaining his mental model for how to think about China.

Moreover, he emphasizes our trade relationship with China much too prominently, as if trade alone will lead the world to peace and progress. Specifically, he asks, "How much was stolen by the Chinese government to boost their military power?" Given how the Chinese think about great power conflict, I would say the entirety of what has been stolen. The Chinese have learned from Soviet failures, that to compete with the US they must do so militarily AND economically.

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#3 - I'm getting the impression that wealthy Chinese are pretty materialistic and ostentatious.

Very. Their kids are worse. 小皇室(Little Royalty).

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They're becoming Americanized.

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However heartening the news that the Great American Novel is dying its deserved death, we've yet to discover whether US print publishers ever learn how to produce and market single-author collections of flash fiction.

Nothing to suggest, either, that our MFA-credentialing industry is aware that the Academy's tedious devotion to the novel no longer counts as "self-recommending".

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2. The Chinese move away from Marxism and adopt western tactics and values, making them formidable competitors. Americans want them to keep wading around in their terrace rice paddies and taking care of the pandas and Siberian tigers. When did the US get the authority to determine who holds what intellectual property anyway?

I doubt the benefits will end up outweighing the costs.

Of course, that's how an economist would look at the situation, since in the US everything is measured by the Puritan/Protestant bottom line, which is the real value system that Americans are trying to spread over the rest of the world, not faux democracy.

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The Chinese are of the view that every panda in the world belongs to China. I wouldn't be surprised if they take the same view of Siberian tigers. The Chinese strike me as very much blood-and-soil types.

Meanwhile, no one seems to care about the Mexican pandas.

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#1 So, which kind of band is the EU, and why can't Britain quit if they want to? I liked their early solo work.

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I've noticed in these discussions that there's basically no distinction made between technology transfer agreements and theft via hacking and corporate espionage. The implication is that the former constitutes theft as well, even though they're agreements made by willing parties. Another implication is that corporations should have the right to take advantage of large supplies of labor, without states or other bodies being able to be in positions to negotiate things like tech transfers that enable said labor to move up the value chain and earn higher returns. Corporations are supposed to be able to have their cake and eat it too.

You're not supposed to do this. You can have replacement levels of immigration that replaces your domestic labor supply, like the US, but you can't negotiate agreements that moves your domestic labor supply up the value chain and garners them higher returns. To draw upon an Oriental concept, think about "Face" here from the perspective of US elites. They've allowed replacement levels of immigration that has replaced its domestic labor supply, while a rising competitor has been negotiating agreements allowing its labor supply to move up the value chain. They look like incompetent psychopaths. And they now face the danger of domestic unrest and revolt (cf. les gilets jaunes) from the domestic labor supply they've been replacing and destroying, and the rise of a competitor who has been doing the opposite of destroying its domestic labor. At this point, US elites can't admit they've been treating its labor like shit. To maintain "Face" and survive, it has to direct its attention outward.

The Chinese population has moved up the value chain from "starving peasant" to "18th century factory worker" conditions, which is not something American workers need to be jealous of.

American workers movement up the value chain entirely consists of moving OUT of manufacturing and IN to tech, which is exactly what is happening. There aren't going to be a ton of higher value manufacturing jobs out there - until we start building large numbers of huge spacecraft or something. What do you imagine these higher value manufacturing jobs consist of ?

"Lighthizer: ‘Made in China 2025’ a threat to global system"

https://www.politico.com/tipsheets/morning-trade/2017/11/06/lighthizer-made-in-china-2025-a-threat-to-global-system-223188

"Made in China 2025 is “a very, very serious challenge, not just to us, but to Europe, Japan and the global trading system,” Lighthizer told Fox News host Laura Ingraham.
“They want to be on top of all the high-tech, all the cutting edge economic areas. And it’s smart for them to do it. I mean, they’re doing something that’s in their interest and that they should do.”"

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You’re off by a factor of about 17.

Anyways, it’s closer in PPP terms to America circa 1985. Comparison issues arise given geographical disparities within a country that large.

I agree about manufacturing. Ideally there is no production in the US at all within 25 years. Move it to China and México. Everyone is better off.

An American Union factory worker, given his skills in the global labor market, deserves about $3 an hour. He’s better off greeting Wal-Mart customers at $8 an hour. He will wail and gnash his teeth, but the beauty of economics is that one’s value will be driven to equilibrium. The world will pay $3 an hour for his labor. Better to hide in a service industry that is not exportable. That way he earns his $5 an hour premium.

But, I don’t want to pay $8 an hour for nothing. So ramp up immigration from Central America.

Honduran average wage is $2.6 an hour. If we import enough we can drive the wage down to $4 an hour.

Open the borders and let’s see the equilibrium. We could get to $2 an hour nannies, and unleash millions of brilliant women from staying at home.

it sounds horrible, but nobody is forced to be a "factory worker" or a "working class" laborer. Stay in school. Don't waste your time partying and doing drugs. Get some skills. Choose not to be "working class" and then you won't have to worry that illiterate central American migrants are going to steal your shitty low-skilled job.

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#4. Yes, if the book is covered by Scott Alexander.

OK, Tyler's coverage of books is good too, if shorter.

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3. What if China arrested an executive of an American company that does business with a country that America disapproves? How would we respond? It seems that Canada has detained for arrest in the U.S. the CFO of a Chinese telecommunications company that has been doing business with Iran. And the CFO is not just any executive, but the daughter of the founder and the sister of the debutante. That's a big reason for today's market selloff. With Tariff Man playing the part of the Don and John Bolton playing the part of the Capo, what could go wrong.

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#2 TC is wrong. He is only a bigot.

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#5..."(The title, “Gavagai,” was the philosopher Willard van Orman Quine’s famous term for a word in an imaginary language that, perhaps like life itself, can be interpreted in multiple ways.)"

Quine thought there was indeterminacy of translation because he was a Behaviorist, not just due to simple imprecision.

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#4 Wasn't the idea that actually reading books is superior to reading literary criticisms of such books a major theme in Metropolitan?

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If the IPs can so easily be copied they are utter rubbish, like the 1-click buying patent. American hubris and bullsh*t.

https://en.wikipedia.org/wiki/1-Click

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