Seven Rotations – October 10th, 2012

10 10 2012

(Seven Rotations is my “week in review”/narrative link dump. I’m going to try to post it every Wednesday- we’ll see how that goes.)

National Day break? What National Day break? While others tried to get out of Shanghai; I decided to stay in- after all, it seems like a bad idea to travel when a billion other people have the same idea. (EXPAT PROTIP: If you want to travel during a holiday, leave the country.)

While I stayed in, I didn’t spend the whole time at home (just 90% of it)… for one, it was time for wedding pictures! Isn’t Angela beautiful? (Rhetorical question: She’s always beautiful.) We should have the real photos back in a few weeks, but until then, this’ll have to do. We had the whole package- six costume changes, sets and scenery across the city, from a suburban movie studio to the packed holiday crowds of the Bund. Definitely a day to remember.

Over the break, I also tackled my first projects for Hult with my project groups. Pictured above is my classmate Artur Mendes with my gaming buddy Arnaud Charpentier, who also happens to be a finance director for Alstom; we interviewed him regarding the industry outlook for power components in China’s near future. All details about the interview are confidential, but I look forward to our next game of Imperial… though that may have to wait a few months.

Also pictured was my project group for our first consulting proposal project, a turnaround plan for Yahoo! I was matched with three guys named Martin, Hult Dean’s Scholar Csaba Marosvari, and the polymathic Ram N. More than enough brainpower for the assignment, but we’re still getting a hang of the leadership thing. It’ll come.

In the meantime, what’s going on in the world? Well, I’ve cast a few blind (or at least sleepy) eyes towards the American elections, but I just can’t work up much enthusiasm. Of the main candidates, I slightly prefer Obama, though strictly for diplomatic reasons; despite that fact, I still can’t be bothered to file my absentee ballot this year. The world won’t end if Obama wins another term; the sky won’t fall if Romney is in the White House. I can’t say that eight years of Bush or four years of Obama has had any significant impact on my life; at least none that wouldn’t have been inevitable given the business cycle, international affairs out of our control, and policies common to both parties (which, their meaningless platform statements aside, are more the same than they are different). Wake me up when there is a candidate I can get excited about.

Though my idea of excitement might be a little different from that of the rest of the electorate. Away from the practical realm, Paul Denlinger brought this interesting study to my attention. While I’d seen it before, it’s interesting to reflect upon again. Income inequality is a huge problem in both the US and China, though it’s even more visible and socially problematic in the latter (where it could ultimately spell the collapse of the ostensibly-socialist government). In the US, nearly any attempt to highlight our true levels of income inequality is met with howls of “communism!”, and straw-man examples of perfect equalization, usually accompanied by an ironic invocation of Orwell (a socialist). Yet, at least in the case of the Democratic party (our ostensibly “left wing” element), equalization isn’t the goal at all. As Bill Clinton said in a speech at the Hult Global Case Challenge, the goal of American liberalism is “enough equality for solidarity, enough inequality for drive”. Or, basically, the conditions which characterized most of the US during the latter half of the 20th century. The conditions of the classes were similar enough for a feeling of solidarity; they were not so far apart that classes grew alienated from one another. The upper class goes to the Riviera; the middle class goes to Disney World; the lower class goes fishing- but they all go on vacation. The upper class has Mercedes; the middle class has Honda; the lower-class has used Buicks and Chevy pick-ups; but everyone owns a box with four wheels. The upper class has McMansions; the middle class has suburban ranch houses; the lower class owns trailers; but they all own houses. The key to American solidarity is this: the life of one class may be different from another, but they are all fundamentally similar in makeup. In China- and soon, in the US as well- the differences are too stark for solidarity- there’s no longer much comprehension of the conditions under which different classes labor. In China, young middle-class Shanghainese don’t seem to even be aware of the situation in which migrant laborers live; the difference of lifestyle and expectation is simply too vast. In America, Mitt Romney tells young Americans to borrow money from their families to start businesses; while this is certainly good advice if you’re addressing a Starbucks-barista-ing private-school graduate from a high net worth family, I’d be willing to wager that, given the low savings rate of our lower classes and the tendency of our middle class to be up-to-it’s-eyeballs in debt, it’s probably not practical for 90% of the people he’s addressing. Let them eat cake?

Cake aside, the bird is the word this week- in this case, Big Bird. Rather than contribute to the noise, though, I’ll hand it off to fake Slavoj Zizek to elaborate. Not that I’m calling Slavoj Zizek fake; though this one, in particular, is. “Engulfed by the Feathered Being” is a bit too far even for him. For a more serious take on the issues of the day, America’s most intelligent young conservative- Reihan Salam- discusses inequality and incarceration, and why the GOP has a hard time dealing with both issues- here. I hope that his “Grand New Party” faction wins, but I’m not holding my breath.

As for hypercapitalism, are the days of algorithmic trading numbered? Nassim Taleb says so, and I’m inclined to agree. I disagree with him, however, about the investment profession; investment professionals will always be necessary in a capitalist economy, and probably in quantities similar to now; though the future doesn’t belong to the quants- it belongs to fundamental investors and analysts, venture capitalists and private equity. Hedge funds have had their day.

In China, the endless fight against corruption is still the order of the day: Charles Custer provided this enlightening translation of an editorial by Wang Gengxing: “Looking Forward to When Anti-Corruption has some Culture”. The article and the comments are interesting, but it has to be said again and again:

It’s the totalitarianism, stupid!

China is, pace Bill Dodson, still a totalitarian country. It is a soft totalitarianism, but it is totalitarianism nonetheless, with no tolerance for the development of a real civil society. The watchword of totalitarianism is nothing outside of the governing apparatus, and, to date, that’s still China’s condition. In some regions, there’s a nascent civil society, especially in the south- this often takes the form of the massive house church movement, or more nefariously, triad gangs- but officially, it’s still beyond the pale. While there are some positive signs- two of the likely top officials in the new government, Xi Jinping and Wang Yang, generally have a record of being more tolerant towards these developments than most- there’s no room for anything like Hong Kong’s ICAC or other independent anti-corruption watchdogs, and until there is, China’s corruption problem- while, per-capita speaking, not as bad as other developing countries– will remain intractable.

And, on that note, I’m out. Three hours of management classes this afternoon, then it’s home for dinner and some quality time with my CFA manuals (and Angela!)



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