NOW, YOU KNOW YOUR BOY Kev is living the high life over here, right? My wallet has $1300US for five months, and that’s for everything by the room. On 260/month, I can afford to eat out every meal, take a two week trip to Yunnan, take a 5 day trip to Shanghai, buy a new digital camera, a new keyboard, over a hundred DVDs, and still have change left over to live it up. For example, we went out the other night to celebrate this girl’s birthday, and I got myself a glass of Chivas Regal. I thought about a Jameson too, but there’s only so much you can do when you’re the kinda guy that thinks shopping at Marshalls is high-end. (Note: Chivas Regal is foul, foul, foul stuff. Us economists actually have a term, Chivas Regal Effect, which means that a price increase will also increase consumer demand. A few luxury goods and college tuition, incidentally, fit this entirely illogical pattern at some point on the DS curve.)I made another classy pickup recently - a Larry Bird Celtics throwback. This is one sick US$7.50 jersey. I think it works too. I played some of the best basketball of my life the other day. Oh, and my NCAA bracket was absolutely ridiculous. I was a perfect 16 for 16 on day one, and overall I’m 27 for 32 (I had GW, Kansas, Syracuse, Minnesota and Stanford winning), which puts me in the 99.7th percentile at ESPN.com. Not too bad of a first round. I only have two sweet sixteen and no elite eight teams knocked out right now, so I’m feeling good. Upset special? Nova over UNC in the Sweet Sixteen and Texas Tech over Gonzaga in the round of 32.
Shopping in general is ridiculous here. I live in a middle-class, relatively quiet (both by Chinese standards) neighborhood. Few skyscrapers, few tourist attractions, not too high density. Nonetheless, and this is no exaggeration, there is something like 5000 stores within 2 blocks of my dorm. I’m serious. There are hundreds of stores selling dress shoes alone. I have no idea how they all stay in business. These stores tend to be no more than 100 sq. ft., really more booths than stores in many cases, but still. There are a number of places to get high-end goods too. It’s no problem to get Prada (legit) or Armani (legit) around here - it’s much easier to get the replica. The daoban, fakes, are often exactly the same anyway. Some factory owners in China will run off a bunch for Nike or whatever, then open the factory late at night and run another batch exactly the same for the pirate sellers. It’s great.
The massive consumer market in China does have some consequences however. I watched a PBS movie on Chinese history 78-today last week. The scenes from Tiananmen, honest to God, nearly made me cry. I have never in my life cried during a movie. You have to see the faces of these students, the same age as me, throwing up the “V for Victory” as they try to escape Tiananmen the day the troops arrived. If you’re unaware of Tiananmen, here’s the synopsis: In 1989, a student protest against govt. corruption and inflation leads to street protests, which lead to student protests across the country, all of which are shut down except for a protest from Beida, Peking University. The students become more and more, defying government demands they leave, and thousands stay in Tiananmen day and night. Gorbachev’s first state visit to China happens at this time, and Chinese head Deng Xiaoping is embarassed by the massive protests in Tiananmen, literally at the steps of the government building. Three students famously stand on the steps of the People’s Congress, heads bowed, with a paper listing their demands. No one from the government greets them. Later, a group of students is invited to talk with the heads of government, which leads to an all out screamfest. Zhao Ziyang, China’s premier, is sacked from his job for being “too lax” on the students. He gets news that the army is coming, and goes to Tiananmen to meet with the students and warn them (Zhao was never a public figure again, and upon his death this Spring, there was no notice in the Chinese papers). Massive crowds hold the army tanks back, and the army is literally unable to reach Tiananmen for two weeks. Eventually, they break through, and fighting breaks out in the streets, with some students fighting with the army. When the army reached Tiananmen, to everyone’s surprise, they fired on the protestors, literally running over the escaping students with tanks. 3000+ dead, many protestors were never able to find a job after graduation (the govt. used to assign jobs to college graduates, and still does in many cases), and tons more were sent to jail or work camps. The Chinese government still claims the death toll in Tiananmen was zero. As students and liberals in Eastern Europe, E. Germany, Czech Republic and Russia began knocking down the totalitarians in 1989, the students and liberals in China failed. Deng did what Gorbachev and the E. German government wouldn’t do - killed his own people. No matter how successful his economic reforms and international diplomacy, Deng must be remembered as a murderer.
The week after Tiananmen, CCTV, the Chinese state channel, showed Deng congratulating workers for a job well done.
On the subject of fights in China, here’s a crazy true-life story. A few guys from my dorm, and an American friend of one of the guys, were at a club and got a bit tipsy. Two of them went outside the club and had an altercation with a group of 3 drunk Chinese guys. One of the Americans popped one of the Chinese guys after a bit of shoving, and next thing you know there’s 20 Chinese trying to take on the American guys. A friend of these two comes of the bar right then, totally unaware of what’s going on, and was quickly beat up. The Chinese dudes were nuts too - they swung a fire extinguisher at one of the American guys, and chased another guy down with an Audi. Eventually two of the Americans got away into a taxi, only to get a call from the third guy a half hour later. They found him standing in the coat room of the bar, his face in bad shape, his hand broken, no shirt, no necklace, and telling them that the Chinese guys said they were Triad-affiliated. Yeah. I’m still sure I could take any Chinese guy I’ve met yet in a fight. Even the security guards here are like 5′9″ - 160.
Three economics ideas I’ve been thinking about: 1) Everyone is told that Economics is the study of the how to best allocate scarce resources. A few economists now think this is incorrect. Economics should be the study of how to harness and propogate innovation. That is, the standard of living increase from 1800 to today is the result of innovation, not allocation, and some policies may increase efficient allocation in the present but provide decreased innovative incentives. I think the two goals often work in tandem, but it’s certainly something to consider when looking at macro policy. 2) The ability to arbitrage economic decisions is what makes economies efficient. That is, if mistakes cannot be capiatalized on (that is, punished) by an arbitraging agent, there are going to be a lot of inefficient decisions. No one makes 100% correct decisions, but a group of people all trying to arbitrage will find the efficient equilibrium. When considering efficiency gains, finding new opportunities to allow arbitrage is important. 3) Purchasing price parity and cost of living should be done by “class”. I don’t know if anyone else has had this idea, but it makes sense. We use PPP to adjust exchange rates based on cost of living. That is, rent is cheaper in Beijing than in the US, so a salary of 16000RMB (about $2000) buys quite a bit more in Beijing than in the US. But you can’t just say that Beijing is 3 times cheaper than the US (or that Boston is twice as expensive as Macon, Georgia). As one goes up the income ladder, once is buying more goods that cost the same everywhere (Nike shoes, brandname alcohol, Playstation2, etc.). Perhaps 16000RMB ($2000) has the purchasing power of $6000 in the US, but a 160000RMB salary ($20000) might let you buy a US$40000 (at US prices) bundle of goods and a 1,600,000RMB salary ($200000) might let you buy a US$300000 (at US prices) bundle. Without some sliding scale, “cost of living” and PPP are meaningless, aren’t they?
Chinese music is, in general, terrible. But…if you want to hear some good stadium rock, check out Cui Jian. He used to be massive in China, but not so much these days even though he’s a million times better than the garbage pop they have here. Honestly, you’ll be begging for N Sync after you hear what they have on Beijing radio. Ok, that’s it. Next weekend, Xi’an, then Shanghai in three weeks. Looking forward.
(Last thing: I heard through the dad of one of my good bud’s back in Oregon passed away last week. I know you guys will, but my guys out in the OR, make sure she keeps her head up, all right? It’s an almost indescribable thing, isn’t it? Fix up, look sharp.)
