It is 2008, stupid – a review of ‘Schism’

Done with ‘Schism’, a good book by Paul Blustein. It is recommended reading for those animated by these issues such as global trade and geopolitics. Gives us a good insight into what has shaped China’s emerging attitudes towards the West. As much as it has to do with Mr. Xi Jinping’s background, his belief in Mao and his determination to see that the Communist Party is not contaminated by the West, it has a lot to do with the Western failure of capitalism.

Before we get into some of its interesting contents, some words on the book: It is well written. Easy on the reader. Paul Blustein’s style is fluid and lucid. Trade is a dry topic and he makes it interesting. 

We do get a good glimpse of the processes of WTO appeals. We also understand the naivete of some of the WTO appellate members when they ruled that Chinese government’s ownership of state-owned enterprises did not mean that the government dictated their functioning. How nice and innocent?!

Also, we do learn how hard America negotiated on China’s admission into the WTO. It should not be a surprise if the very process itself made China determined to game the system in its favour. It can be and it was humiliating and condescending.

2008 heralded a geopolitical seismic shift:

Early on in the book, Paul Blustein cites Charlene Barshefsky saying that China’s attitude changed in 2008:

In the years since striking that agreement, Barshefsky, now back in private law practice, has outspokenly criticized the direction of China’s economic policies. “The environment in China has shifted negatively for foreign businesses,” she said at a 2016 event on the fifteenth anniversary of China’s WTO accession. “Multinationals saw enormous gains in China…from roughly 1999 to 2007-08. But at that juncture, opening began to sputter…and in the place of reform and opening, increasingly what is seen [are] zero-sum, mercantilistic policies. (p.99)

Not surprising.  That is when Hank Paulson had to literally plead with the Chinese to bail them out. Honestly, how does one expect to dominate the world and a relationship after such a plea for assistance?! In fact, I would say that it is either delusional or chutzpah to think that one can beg China for a bailout and then try to put China in its place. If I were in China’s place, I would respond with lots of snigger and derision too:

“He wanted me to know that the financial crisis in the U.S. had affected the way he and others in the senior ranks of the Party saw us,” recalled Paulson, who quotes Wang as saying: “You were my teacher, but now here I am in my teacher’s domain, and look at your system, Hank. We aren’t sure we should be learning from you anymore.” (p.203)….

The depths that America plumbed — and the crisis in Europe that followed — thoroughly discredited Western-style capitalism in the eyes of many Chinese. (pp. 203-204). 

In that regard, it will be interesting to speculate on whether the IMF delay in issuing its Article IV report on China with the inclusion of a judgement that its exchange rate was ‘fundamentally misaligned’ prevented a big adjustment in China’s exchange rate. A Board meeting was scheduled for Sept. 22, 2008. On Sept. 15, Lehman Brothers’ collapse was announced to the world.

Everything changed after that:

Here is the crucial wording from the report’s executive summary: “There are significant concerns that the exchange rate may be fundamentally misaligned and exchange rate policies could be a significant contributor to external instability….Accordingly, staff recommends that the executive board initiate an ad hoc consultation with China that would be expected to be concluded within about six months.” The September 22 board meeting was never held. The Article IV report was buried. Indeed, the US Treasury lost interest in prodding the IMF to label China. (p. 170). 

Now, even if the report was released a week before that, given America’s desperation and its turn to China for assistance would have sealed the fate of that report in any case:

Paulson’s book, On the Brink, offers helpful insight regarding the reasons for that seismic shift. In his chapters about events immediately following the Lehman bankruptcy, the former Treasury secretary recounts numerous phone calls to Beijing in which he and other Treasury officials were essentially imploring Chinese leaders to see that it was in their own self-interest to help keep the rest of the US financial system afloat. (p. 171). 

Nothing captures the changed geopolitical power balance than this paragraph:

Humiliating retreat for the IMF came almost exactly two years after the board’s approval of the 2007 rule change, when the Fund essentially vowed to abandon the term “fundamental misalignment.”24 Only then, in July 2009, did China allow the long-delayed completion of its Article IV report — and the report placed before directors contained much softer language on the RMB than the one that had been drafted in the fall of 2008.25 This was emblematic of the elevated geopolitical status with which China emerged in the wake of the crisis. (p. 173). 

We can debate,  until the cows come home, as to whether Hank Paulson should have wielded the exchange rate card with China. I doubt if anyone would do that with knees bent and hands folded.

Obama administration tried to wrest back the initiative:

Given that, frankly, it is creditable how much initiative that the Obama administration wrested back. Yes, there is some revisionism on my part here, admittedly.

What comes through loud and clear from the book is not that the Obama administration was squeamish about dealing with the Chinese or tackling their trade practices. There is enough information to make the case that the Obama administration pushed back, including making aggressive and unilateral changes to the appellate body of the World Trade Organisation. It did not convey the ‘Market Economy’ status on China despite China’s strong insistence. 

That conveys two things. Contrary to what was thought, the Obama administration was not too meek. I must add the following, however, from the book:

The main economic policy heavyweights in the Obama White House — Geithner and National Economic Council Chairman Larry Summers — “were critical of the direction the Chinese economy had taken in recent years and were disturbed by the impact of its discriminatory practices on U.S. competitiveness,” so they laid out a variety of options for the president to consider “from relatively anodyne to draconian ones,” according to Bader’s book. “But at the end of each discussion or memorandum, they consistently concluded that the impact of China’s practices on the U.S. economy was in fact quite small, and that even positive corrections would have considerably less impact in the United States than most people imagined. (p. 213). 

The book he is referring to is this one:  ‘Obama and China’s rise’ [Link]

Two, equally, it also means that the Trump administration did not take a wrecking ball to the trade relations with China or to the international body WTO. It was merely continuing to tread on the path paved by the previous administration. It imparted – in fits and starts – some more momentum and teeth – to those efforts.

Trump re-negotiated NAFTA and it is illuminating to note that the Obama administration too thought that NAFTA conferred unfair advantage on Canada and Mexico. In fact, Yanis Varoufakis grudgingly praised Trump for renegotiating NAFTA:

he tore up Nafta, the North American Free Trade Agreement that took decades to put together. Remarkably, he replaced it swiftly with one that is certainly not worse – at least from the perspective of American blue-collar workers or, even, Mexican factory workers who now enjoy an hourly wage considerably greater than before. [Link]

Bush administration was insufficiently alarmed:

The administration that missed more than a trick or two is the Bush administration. It was partly ideological and partly convenient. They were either naive in their belief that China would change or become a little more liberal or they believed that they should not interfere with market forces or that recourse to both of those positions was simply convenient. 

Perhaps, China would have but for the repelling effect of the chaos of American democracy and capitalism. We should not forget how America damaged its own credibility with its war on Iraq on phoney grounds, as it turned out. So, the Bush administration, in many respects, turned out to be the one that prepared the ground for the political polarisation in America, its diminished economic clout and fiscal wherewithal too, forcing the country to rely on monetary policy snake oil.

Post-retirement, the Bush family is cosying up to China as well. Recently, it conferred an award on Henry Kissinger and senator Dianne Feinstein for furthering Sino-American relations!

The decision to negotiate with China for its integration into global trade via membership in the World Trade Organisation was not wrong. The Chinese government and its record up to 2000 from 1979 made the case for a punt on its economic integration, notwithstanding Tiananmen in 1989. 

It is wrong to say that America failed to foresee the turn that China would take under Xi. Perhaps, that is true. But, that does not matter. What America failed to foresee was the collapse of its own capitalist model which has turned overwhelmingly predatory. It continues to be weighed down by it. American finance and technology czars are pushing the country into abyss and are hamstringing its policy flexibility for they are putting their selfish interests ahead of the nation, as they did before 2008.

The failure of American capitalism and the failure to foresee that failure are both hubristic. That is no surprise given the way empires have eventually collapsed historically.

Just as George Bush paved the way for the collapse of American clout, prestige, influence and geopolitical advantage over China, on China’s side, the understated Hu-Wen combination facilitated the return of the public sector, state control and party control over the commanding heights of the economy and even of the society under Xi. Paul Blustein does well to document that.

One man who comes across as being very astute about Chinese intentions and methods is Tim Stratford, former Chairperson of the American Chamber of Commerce in China:

“There’s an ambiguity that China’s government delights in fostering — they like to have it both ways,” (p.214)

It seems unfortunate that his practical wisdom and understanding have not been utilised as much as it should have been, by successive American administrations. At least, that is the impression that one gets from the book.He seems to have resigned from government role in 2010. 

Would multilateralism have worked? Perhaps

Perhaps, where Paul Blustein errs, in my view, is that he thinks that China could have been handled better or more effectively through WTO rather than through the bilateral and arbitrary mercurial methods of President Trump. He may be right about his criticism of the Trump approach which was not consistent. In fact, Robert Lighthizer was more consistent than Trump was. But for Covid, we cannot be sure of how Trump would have dealt with China. He might well have cut some deals and touted it as victory. But, that does not mean that multilateralism or globalism would have succeeded. 

Tim Stratford tells him that China thrives in ambiguity and in mixed messaging. They want to have the cake and eat it too and they do it very well: 

Recounting his numerous interviews with managers of technology-intensive multinationals based in China, Lee Branstetter, an economics professor at Carnegie Mellon University, stated: “I have heard personal and detailed accounts of the lengths to which Chinese companies and the Chinese government have gone in their collective efforts to extract technology from foreign multinationals,” and although the transactions might technically be “voluntary,” they are “only voluntary in the sense that the business transactions engaged in by the fictional gangster of the Godfather series, Vito Corleone, were voluntary. China is effectively making an offer multinationals cannot refuse.” (p. 296).

While many tactics of China in the international arena are not worthy of replication either out of civility or out of a sense of fairness and mutual respect, people from many developing countries would wish their politicians and bureaucrats would negotiate as hard and devise as many ways as China does to get the best technology, knowledge and skills for their country. 

To be fair to Blustein, he just does not simply stop with admonishing Trump for his unpredictable and inexplicable policy zig-zags. He cites two specific avenues through which the United States could have assembled a ‘coalition of the willing’ to take on China through WTO. Developing countries should focus on the second one at least as long as WTO is still around:

(i) But the heart of the case she (Jennifer Hillman) proposed involved Article XXIII of GATT/WTO rules, called “nullification or impairment.”4 Obscure and seldom used though it may be, this provision might be the perfect ace in the hole for playing against China Inc. Under this provision, a WTO member can be found in violation of its obligations and subject to sanctions if its policies nullify or impair the legitimate expectations of its trading partners by violating the overall intent of the rules — even if no specific rules are being broken. (pp. 398-399).

(ii) section 15 (b) of the protocol (he is referring to the China WTO accession protocol), states that if distorted market conditions in the Chinese economy cause “special difficulties” to trading partners in estimating Chinese subsidies, the calculations can be made using prices and costs for comparable goods and inputs in other countries — which makes it much easier to conclude that subsidization is occurring and high duties are warranted. This provision doesn’t expire, unlike other discriminatory rules that China accepted (for example, the special China safeguard, which had a 12-year duration, and the non-market economy status for anti-dumping cases, which was supposed to last 15 years). (p. 401). 

While I am prepared to give Paul Blustein the benefit of doubt for his recommendation of an alternative approach to dealing with China than the one that the Trump administration took, his coverage of Huawei and 5G borders on naivete. His defence is that this article on how the rise of Huawei coincided with the decimation of Nortel (through spying and hacking) came out after his book was published. Here is another one – by John Sawers, former chief of MI6.

In conclusion:

Again, to reiterate, they lost all respect for the United States after 2008. That is why China decided to up the ante in the race for global dominance, with its own global ‘institutions’ and ‘initiatives’ such as the BRICS Bank (New Development Bank), Asian Infrastructure Investment Bank (AIIB), Shanghai Cooperation Organisation, Regional Comprehensive Economic Partnership and the Belt and Road Initiative.

Simply put, China is not interested in such a world that the West has created. It is determined to create such a world on its own terms where all other countries will be its tributaries. 

Considering how much America has made a meal of its economics, capitalism and politics, it is hard to fault China for harbouring such ambitions no matter how unviable its own model is. On present evidence, the former stands more discredited than the latter.

That said, I think America was wrong to withdraw from the Trans-Pacific Partnership. Trump made that call. Not because it would have mattered in economic terms. It would not have. At the very least, it would have been an irritant for China just as the Quad is, for example. That irritation would have made them commit some errors and antagonise some more countries even more spectacularly than they have done so far.

Wall Street had a big hand in bringing America to its knees in 2008, making its government beseech China for support. It continues to romance China. See this story in WSJ published in Dec. 2020 and this one in FT published on 29th May 2021. Wall Street might have played a big role in bringing Didi’s Initial Public Offering to America, even as it appears increasingly likely that the company was indeed warned by Chinese regulators to postpone the IPO and address their security concerns because a news-story in WSJ discloses that Bytedance heeded precisely such a warning and postponed its public offering in America. It may be a coincidence (or not) that Jean Liu, the president of Didi Chuxing, was previously a Managing Director in Goldman Sachs. Simply put, it appears that Wall Street has encouraged a Chinese company to raise money from Americans by withholding critical information from them. Just think about it.

In the end, too much of finance is behind America’s decline which, in turn, is behind the story of the schism that Blustein tells. Too much finance continues to stalk America.

Does a digital version help yuan replace the dollar?

Pl. find below the comment I had made on an article in FT that appeared on the above topic:

A bit garbled, to put it mildly. First, there is no evidence that financial markets particularly care about ‘attacks on democratic institutions’ in the US as the writer alleges. If that is a consideration, lots of financial markets and assets in the world would have been long out of favour, including China! So, what is this baseless argument about investors worried about the dollar because of the attack on US democratic institutions?

In any case, it is a separate discussion about who attacked what and, under whose watch, did democratic institutions flourish in America, etc.

Second, that a digital currency should make Chinese government comfortable with relaxing capital controls is a clever argument. It may, in theory. In practice, it is unlikely to happen. One simply has to look at the evidence.

Moreover, even if it made the government in China comfortable with relaxing capital controls because they have greater visibility on all the flows, that should make the actual market participants more uncomfortable and not less.

Third, there are news-reports that HSBC is denying Hong Kong citizens who had taken up British passports the withdrawal of their pension savings held with HSBC. That does not engender confidence on the rule of law and contracts which are more important than ‘assaults on democratic institutions’.

Four, the one argument that is valid is whether America would end up undermining the ‘store of value’ function of the US dollar with its policies that create inflation and let it stick rather than it be transitory. Persistent and long recourse to negative real rates would reflect poorly on the ‘store of value’ of the US dollar. It also means no real compensation to holding the currency.

However, whether that should automatically lead to the preference of Renminbi is not a open-and-shut decision. Far from it.

Finally, as the chart in the article shows, the use of Renminbi even to settle China’s goods trade had peaked at over 25% and had come down. Only in recent years, it has been slowly inching up and is still far away from the previous peak of 25%. That speaks volumes.

A century of CCP

Time for anniversaries. In India, fourth anniversary of GST, of Insolvency and Bankruptcy Code, etc. Far bigger and arguably more important than these has been the centenary of the formation of the Chinese Communist Party (CCP). Nikkei Asia had quite a few interesting articles. Before we go there, this is what their Editor wrote about one of the key sentences in President Xi’s speech:

“We will never allow any foreign force to bully, oppress or subjugate us. Anyone who would attempt to do so will find themselves on a collision course with a great wall of steel forged by more than 1.4 billion Chinese people.”

Because, in the Chinese text, this is literally translated as:

“Anyone who tries to do so will be crushed to death before the Great Wall of steel built with the flesh and blood of over 1.4 billion Chinese people.”

The second-most important quote in the speech was this:

“Resolving the Taiwan question and realizing China’s complete reunification is a historic mission and an unshakable commitment of the Communist Party of China.”

This is the link to the official English language translation of President Xi’s speech, provided by CCP via Xinhua News Agency.

July 1 also happened to be the 24th anniversary of the handover of Hong Kong to China by the UK. The city-state has now changed beyond recognition. This article captures the change quite well.

In ‘Foreign Affairs’, Ang YuenYuen, the author of ‘China’s gilded age’ has a very good article on how China’s corruption has evolved. It is not a ‘it is all bad and terrible’ story. She is practical, pragmatic and sensible. If you have access to ‘Foreign Affairs’, the article is well worth a read. My friend Gulzar Natarajan strongly recommends her book.

Key extracts from her article:

Before Xi, in fact, the country was making steady progress toward open governance. Some local governments were increasing transparency and starting to solicit public input on policies. Despite the constraints of censorship, investigative newspapers such as Caixin and Southern Weekend regularly uncovered scandals that prompted reforms. Several localities experimented with reporting the assets and income of government officials, a move supported by legal activists; in 2012, central regulators considered turning these experiments into national law. As soon as Xi’s anti-corruption campaign began, however, these bottom-up efforts were snuffed out, and the government tightened its control over civil society.

In many ways, Xi’s centralization of personal power has put him in an exceptional position to challenge vested interests and advance difficult reforms. He could reduce monopoly control of state-owned enterprises and empower private companies, which, as of 2017, accounted for more than 90 percent of new jobs created. A strong private sector would accelerate the type of broad-based growth that reduces inequality. Or Xi could correct the fiscal imbalance between the central government and local governments, so that the latter are not forced to lease land and borrow money to raise revenue. He could also streamline the ballooning demands imposed by central planners on local governments, a move that would both reduce their need to exercise regulatory power and relieve their budgetary pressures.

Yet Xi has shown little interest in such reforms. Instead, in his bid to end crony capitalism, he is reviving the command system, the very approach that failed miserably under Mao.

Her description of different forms of corruption is interesting:

Different types of corruption harm countries in different ways. Petty theft and grand theft are like toxic drugs; they directly and unambiguously hurt the economy by draining public and private wealth while delivering no benefits in return. Speed money is akin to painkillers; it may relieve a headache but doesn’t improve one’s strength. Access money, on the other hand, is like steroids. It spurs muscle growth and allows one to perform superhuman feats, but it comes with serious side effects, including the possibility of a complete meltdown.

This should resonate with India:

Why did access money explode? Because the reforms China took did not diminish the government’s power over the economy so much as change it. Whereas in the 1980s, the primary role of public officials was to plan and command, in the globalized capitalist economy of the 1990s, they acquired new functions—attracting high-stakes investment projects, borrowing and lending capital, leasing land, demolishing and building at a frenzied pace. All these activities gave officials new sources of power that were previously unthinkable in a socialist system.

Land-use conversion is also a big source of corruption and delays in India:

Instead of relying on manufacturing as the primary engine of growth, local governments turned their attention to leasing agricultural land to real estate developers for residential and commercial use. In the two decades after 1999, the amount of revenue raised through the leasing of land rights grew more than 120-fold. Developers profited handsomely from this arrangement, collecting exorbitant rents after leasing farmland at bargain prices and turning it into glitzy real estate projects. In one instance related to me by a bureaucrat, the value of a piece of land increased by a multiple of 35 simply through being converted from rural to urban use.

The statement below made at the beginning of the article serves as a good conclusion:

Recognizing the dangers of crony capitalism, Chinese President Xi Jinping is attempting to summon China’s own Progressive era—an age of less corruption and more equality—through brute force. The problem, however, is that this is not the way to ensure that real reform takes hold. Xi is suppressing the bottom-up energy that holds the key to solving China’s current woes—and in so doing, he may end up making them even worse.

After firmly putting Jack Ma in his place – partly for justified reasons and largely for political reasons. See here and here. The article in Bloomberg puts the erosion in the market capitalisation of Jack Ma’s Ant Group at USD70.0bn. It was not just about the unbridled and unregulated growth of Fintech. Jack Ma was removed as President of the Hupan University as well. It was an ultra-elite business school. Quite bold in its vision. Way back in November 2020, WSJ had revealed that it was President Xi who personally ordered scuttling Ant Group’s IPO. If you want an article that is not behind a Paywall, you can try this one. But, in the rapidly evolving world of news and stories, this is old news.

Just a week after the IPO of Didi (ride-hailing company with an app), the Chinese regulators order the app to be removed from app. stores in China. Its shares lost USD22.0bn in market capitalisation and was trading below the IPO price. The story is that China is concerned about data security of the users of the app. passing into foreign hands. But, why wait until just a few days after the IPO in a foreign country?

“The decision to crack down on Didi three days after the IPO looks very unfair to investors. It would have been better to prevent the company going public, as they did with Ant Group.” [Link]

Bloomberg writes that Didi was warned to delay the IPO:

​The Cyberspace Administration of China suggested Didi delay its IPO weeks before the debut to check its network security, the Wall Street Journal reported, citing people with knowledge of the matter. The watchdog was particularly concerned that listing in the U.S. would require Didi to disclose its major vendors and suppliers, which could leave it vulnerable to security breaches, it said, citing unidentified people.

Didi said in an emailed statement on Monday it was unaware of the Chinese watchdog’s decision to suspend user registrations and remove Didi Chuxing from app stores ahead of its listing.

It is difficult to believe that the company would have ignored the advice/warning from the regulator after witnessing what happened to the Ant Group and Jack Ma. It just isn’t persuasive.

Some think it is to arm-twist them into buying out government-owned entities given that household financial repression might have run its course and that Beijing cannot continue to stimulate the economy by dipping into household savings. Hence, corporates flush with cash (post-IPO) are the next logical targets. Plausible theory. But, it is almost perverse. Such orders are also an insult to the investors. Well, they deserved it.

Back to Nikkei Asia articles on the centenary of the CCP. This quote reminded me of the impression/message I took away reading ‘China shakes the world’ by James Kynge, published in 2006. That was my earliest introduction to China before I visited the country thrice over the course of the next ten years or so:

China, if likened to a human, is close to a state of excessive self-confidence with a simultaneous anxiety disorder. There is a high risk, thus, of China resorting to reckless behavior. The risk will likely further increase in the future. [Link]

Key sentences from the article by Greg Austin on China’s cyber-security preparedness make for important reading. They actually spell trouble for China. The emphasis below in some sentences is mine:

But survey data from China’s University Alumni Association indicates that it has no world-class universities in the field of cybersecurity, which is an essential foundation of cyber capability. The Chinese innovation system is struggling to adapt to the demands of security in cyberspace and universities may be its weakest link…. the Chinese Communist Party is too intent on linking promotion to ideological activism, monitoring every email sent by professors and students…. But the three-way cooperation among government, industry and academia — a so-called triple helix of national innovation — is not yet the norm in China….

Japan remains second only to the U.S. in important aspects of information and communication technology industrial performance and policy. For example, it has more tech and telecoms companies in the 2020 Fortune Global 500 than China, 10 and eight respectively, compared with the U.S. at 16. Japan has arguably been at least as influential in fifth-generation, or 5G, mobile technology standard setting as China. Japan remains, along with the United States, the largest funder of the International Telecommunication Union.

With its attitudes towards private industry evolving into one of suspicion and suppression, such cooperation (see  emphasised portion) will not be any easier going forward.

On cue, Tom Orlik and Eric Zhu have an interesting analysis in Bloomberg on the scenarios in which China’s aggregate GDP may never be able to overtake America’s. It has some interesting charts. One of the risks is the decreased or diminished collaboration and cooperation on technology. China’s paranoia with data security – given that it has been the violator than the victim recently, if not longer – will not help. Moreover, global attitudes towards China have hardened.

The latest PEW survey on global attitudes towards China, but for the extraordinary outlying generous view, towards China and its leader, of Singaporeans, shows that several countries in the world view China and its leader negatively and assign a lower priority to economic ties with China than with America. Singapore’s behaviour too appears to be influenced by the preferences of older ethnic Chinese.

Lastly, for those of you who may not be aware, ChinaHeritage.net is not an often-visited site. It has articles written by the Chinese and/or by foreigners who seem to know Mandarin quite well. For example, if you have the patience to plough through this document by Xu Zhangrun, we may learn a lot about China, its people and culture, their language, their way of expressing sentiments, emotions, fears and aspirations. I am not fully done with it. Two other documents of his I wish to read are this and this.

Weekend nuggets from Peter Tasker

In order to tell my friend Gulzar Natarajan about ‘Peter Tasker’ (who has made Japan his home), I began searching for him on the internet (and among my old saved bookmarks). I have forgotten his name except that I remembered that it began with P and the last name began with T. These days, I don’t check the bookmarks at all. I just search for what I want. So, there is the useful old treasure out there in the ‘Bookmarks’ folder. Thankfully, I had saved his URL and I recognised the name.

I read two of his recent posts on Rash Behari Bose, his Indian curry adapted to Japan, his Japanese wife and how the Quad – esp. India and Japan – could do a lot better than now. These sentences stood out for me, in the context of the times we live in:

The pan-Asianists may have been right about the western colonizers, but they were woefully naïve in assuming that the natural state of Asia was one of peace and harmony between different peoples. There was nothing in pre-colonial history to support such a belief, nor does contemporary reality correspond with it.

Also, the comment about the ‘Right’ and the ‘Left’ was revealing of the times then and the times now:

In the crude ideological categories of today’s world, Mitsuru Toyama carries the label of “right-wing nationalist.”  He was a major figure in two semi-clandestine organizations, the Black Dragon Society and the Dark Ocean Society, and through mysterious means rose from poverty to riches while remaining a private citizen all his life.

Yet he was on good terms with the bohemian Nakamuraya crowd, to the extent that examples of his calligraphy remain in the Nakamuraya art collection to this day.

Historian Ian Rapley of Cardiff University says this about the Nakamuraya circle. “There were undoubtedly strong socialist and in particular anarchist connections but, whilst we might characterize them broadly as ‘progressive’ or some similarly loose term, it is important to recognize that many associations crossed what seem, to contemporary eyes, to be intellectual boundaries.”

What gave the Taisho era its freewheeling dynamism – so different to what came before and after – was this willingness to cross boundaries and the intellectual ferment that was thereby generated.

You can read the two-part fascinating historical article here and here.

Then, I also came across his review article of Daniel Yergin’s new book, ‘The new map’. I had not heard about it. Well, to me, it appears to have been a silent release. The article is from January 2021. The book, its subject and the conclusions resonate with me. I will get hold of it.

Over 80% of the world’s people have never been in an airplane. ‘Flight shaming’ may be a social mode in Sweden, population 10 million, but China, population 1.5 billion, is building eight new airports a year.”

Yergin’s main scenario is that the global fleet of planes will double over the next thirty years; that oil consumption will hardly fall at all in absolute terms, although its share of total energy consumption will decline significantly; that the number of ICE-powered vehicles will be more or less unchanged, although over half of the new cars sold in the world will be EVs.

“Oil will maintain a pre-eminent position as a global commodity, still the primary fuel that makes the world go around,” he declares. “Some will simply not want to hear that. But it is based on the reality of all the investment already made, lead times for new investment and innovation, supply chains, its central role in transportation, the need for plastics from the building blocks of the modern world to hospital waiting rooms, and the way the physical world is organized.” [Link]

Some extracts from ‘Schism’ by Paul Blustein

I have not finished ‘Schism: China, America and the fracturing of the Global Trading System’ published in 2019. I am 55% through. I don’t agree with Paul Blustein’s writings all the time but it is difficult to ignore what he says. Of course, that has also a lot to do with how he writes. He is compelling. He does a lot of research. His book, ‘The Chastening’ on the Asian financial crisis of 1997-98 is a very good read. I have read only snatches of it. I am going to present some extracts from Chapter 4 of ‘Schism’ here:

Referring to China’s WTO accession in 2001, he writes:

To appreciate the profundity of this transformation, it is important to recognize that rule of law had been an alien concept throughout nearly all of China’s history….In criminal cases, torture was common in extracting confessions, and for ordinary people, pressing a claim in court carried a taint of disreputability and often involved humiliating treatment;

Here he quotes Tim Stratford who was the Chairman of the American Chamber of Commerce in China when China’s accession to WTO was completed:

“I told him, ‘Mr. Minister, some people say China’s not serious about these commitments,’” Stratford recalled. “I said, ‘I don’t agree, because otherwise China wouldn’t have spent 17 years negotiating. But based on my experience practicing law in China for a couple of decades, I think you’re going to use every grey area and loophole to greatest advantage.’ And he looked at me and said, ‘You really understand China.’”

How devilishly difficult it is to go from trade, comparative advantage and winners compensating losers. It has rarely happened:

Only later did the economics profession diagnose and label what had happened with the publication in 2016 of an article titled “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade,” by David Autor of the Massachusetts Institute of Technology, David Dorn of the University of Zurich and Gordon Hanson of the University of California, San Diego.35 Building on an accumulation of research, the article presented evidence showing that in the years following China’s WTO entry, Chinese imports had an impact on US employment, especially in manufacturing, that exceeded anything traditional economic models predicted.

Yes, China shock, in reality, was not something that economists’ models could not have anticipated:

What distinguished the China shock was, first of all, China’s economic size, speed of growth and import penetration — an order of magnitude different from the previous episodes of foreign competitive pressure. Imports from China swelled from 1.0 percent of US GDP in 2000 to 2.6 percent in 2011, almost a full percentage point more than the highest comparable figure for Mexico or Japan. Second, and in some ways more important, was the impact on communities with concentrations of manufacturers that competed with Chinese producers. Employment in these areas stayed depressed for years as laid-off factory workers proved unable or disinclined to seek jobs elsewhere. In addition to Hickory, another hard hit furniture-making town was Tupelo, Mississippi; other affected communities included Providence, Rhode Island (jewellery), San Jose, California (electronics), West Plains, Missouri (shoes) and Murray, Kentucky (toys).

A well-intended measure creating an unintended consequence:

And regarding the China shock, here’s the punchline: Autor, Dorn and Hanson found that in areas most heavily affected by Chinese imports, the type of federal aid that many laid-off workers turned to was Social Security Disability Insurance, which provides recipients with government payments and Medicare benefits if a doctor certifies that they are unable to work — a virtual guarantee of permanent withdrawal from the labour force. Incredibly, per-capita Social Security disability payments increased 30 times more than TAA payments in China-shocked regions.

G-7, Lab-Leak, Stagflation and MacKenzie Scott

This blog post must be seen as a free-flowing, loose and not-so-rigorously thought-through or argued post. It is random stuff. Well, if some of you think, ‘What’s new?’ then you got it.

(1) A journalist writing for The New York Times, reportedly, missed out that a G-7 meeting was held in 2019. That was a simple verifiable fact. Chris Balding, in his tweets, points out that the communication in the 2019 meeting – when the US had reportedly alienated its European allies under a truculent President – was almost the same as it was last week. On China, that is. Hence, he found it amusing that the faithful media parroted the line that Biden had managed to mobilise his European allies to take a united stand against China. The summit declaration is here. The 2019 summit declaration is here. You decide. I could not see a strong statement on China except for a reference to Hong Kong. Perhaps, this screenshot of Chris Balding is from 2018 summit.

Perhaps, he did not. Perhaps, he did, because there seems to be some breakthrough in the longstanding dispute on the issue of subsidies to Airbus, with Boeing crying foul. Of course, in the meantime, Boeing has had several other problems. A culture that went awfully bad. I am sure books have been written on it. Sample this one.

Babylonbee’s humourous imaginary story on NYT moving its HQ to Beijing since its staff did not want to see anymore American flags rang quite authentic!

(2) On the lab-leak theory, Josh Rogin is dismayed that the US administration is playing truant. Anthony Blinken, Secy. of State, expects WHO to come up with the goods on a second round of investigation. Wow! That is guaranteed to deliver the goods, no doubt. Rogin wonders what the follow-up action is, if there is a dead-end? Blinken did not have an answer. Josh Rogin has a podcast with Megn Kelly. I did not listen. Heard some snippets. This blog has always been sceptical of US ability and willingness to trace the origins of the virus. Both America and China are intertwined in so many uncomfortable ways with the former compromised in many areas and with the latter doing the compromising.

(3) There is much hyperventilation (sample) on India’s CPI inflation print of 6.3% for May. If I were RBI, I would ignore it. There is nothing to see. Under the circumstances, that is. In fact, been thinking that NDA should take a page out of the book of UPA II on stimulus. Not that big but somewhat along those lines. Of course, of course, the world was different then. Growth was booming everywhere. India was just sowing the seeds for a NPA crisis then. Now, banks are not keen on lending. So, will banks lend even if the government stimulates? Good questions and no clear answers. But, one thing is that UPA II did succeed in stimulating the economy too well. RBI played its part as now. So, let us see.

(4) My friend Amol Agrawal has a blog post on South Africa’s lost decade. Let us include Brazil too. That is the point. India’s growth stagnation of the 2020s (especially in the last four years of the decade and in 2012 and 2013) has to be seen in the larger EM context.

(5) There was an interesting discussion in the family WhatsApp group about Mackenzie Scott giving away her alimony from her husband (Jeff Bezos). So, women in the group were boasting that women were more generous. Here, the man generated wealth that could then be given away. The story does not end there. How did the man generate the wealth? He decimated the Main Street pretty much in many cities in America and has reached out to the world. Perhaps, he is going to outer space to decimate Main Street there. If only Amazon had not done any of this, would the world have been a better place, overall, notwithstanding Ms. Scott’s generosity? I am wondering. Not easy to answer. Matt Stoller has an interesting (damning) post on Amazon Prime.

(6) There is new footage of Bat Reservoirs (cages) in the Wuhan Lab. Well, nothing to see here. Move on.

Let this sink in

It is not just Fauci, Daszak, Baric, Kristian Andersen, et al. The ties, as we had read in ‘The Hidden Hand’, run deep, run wide and have been running for long. America is very very unlikely to get to the bottom of the matter on the origin of the virus. It knows what it would find there and it does not want to share it with the rest of the world.

The implications for the rest of the world, particularly India, are rather disturbing.

Grants from the Pentagon included $6,491,025 from the Defense Threat Reduction Agency (DTRA) from 2017 to 2020 with the description: ‘Understanding the risk of bat-borne zoonotic disease emergence in Western Asia.’ The grant was categorized as ‘scientific research – combating weapons of mass destruction.’…

…. One notable EHA ‘policy advisor’ is David Franz, a former commander at the principal US government biowarfare and biodefense facility Fort Detrick. Franz was an official in the United Nations Special Commission which inspected for bioweapons in Iraq. [Link]

(2) Ian Birrell on how professional journals/magazines like Lancet, Nature, et al, prostituted themselves. He calls them ‘useful idiots’. Indeed. For China.

Only now is acceptance emerging that the science establishment colluded to dismiss the lab leak hypothesis as a conspiracy theory, assisted by prominent experts with clear conflicts of interest, patsy politicians and a pathetic media that mostly failed to do its job. And yet, at the heart of this scandal lie some of the world’s most influential science journals. These should provide a forum for pulsating debate as experts explore and test theories, especially on something as contentious and fascinating as the possible origins of a global pandemic. Instead, some have played a central role in shutting down discussion and discrediting alternative views on the origins, with disastrous consequences for our understanding of events…..

….. The pangolin link was a false trail laid from China. Nature, however, rejected a submission from another key scientific dissident that showed how all four papers primarily used samples from the same batch of pangolins and that key data was inaccurately reported in two of these papers. Richard Ebright, a bio-security expert and professor of chemical biology at Rutgers University, argues that such tolerance of “material omissions and material misstatements” expose a massive issue. “Nature and The Lancet played important roles in enabling, encouraging, and enforcing the false narrative that science evidence indicates Sars-CoV-2 had a natural-spillover origin points and the false narrative that this was the scientific consensus”.

Or as another well-placed observer put it: “The game seems to be for Nature and The Lancet to rush non-peer revised correspondences to set the tone and then delay critical papers and responses.”….

….. But why would they do this? This is where things become even murkier. Allegations swirl that it was not down to editorial misjudgement, but something more sinister: a desire to appease China for commercial reasons. The Financial Times revealed four years ago that debt-laden Springer Nature, the German group that publishes Nature, was blocking access in China to hundreds of academic articles mentioning subjects deemed sensitive by Beijing such as Hong Kong, Taiwan or Tibet. China is also spending lavishly around the world to win supremacy in science — which includes becoming the biggest national sponsor of open access journals published by both Springer Nature and Elsevier, owner of The Lancet. [Link]

One source estimated that 49 sponsorship agreements between Springer Nature and Chinese institutions were worth at least $10m last year. These deals cover the publishing fees authors would normally pay in such journals, so they smooth the path for Chinese authors while creating a dependency culture.

I just would like to leave here two columns I had written for Mint – one in 2014 and one in 2017:

(1) Mint, 20th October 2014: ‘The ‘Too Big to Fail’ Club expands
The inference to China is hard to miss. Hearts in the US would not skip a beat for Russian slowdown. If China’s economy slowed, it could have consequences for the US well beyond traditional trade linkages. The web of financial links between Wall Street and China and its importance as a buyer of US financial assets puts China also in the category of TBTF for the United States……
…..Wall Street banks are too big to fail. The stock market is too big to fail and China is too big to fail. The two things that policymakers have allowed to die are sanity and capitalism. [Link]
(2) Mint, 9th May 2017, ‘China is not collapsing’:
China retains the ability to turn the tap off and on and the rest of the world, particularly the US, is unwilling to or afraid of letting China fail. China is too big to fail. The China economic story has been brittle and fragile for quite some time now. But it has not collapsed. The reason is that the financial market participants do not want to believe and act accordingly. If they did so, the game would have been up long ago. They are acting in rational self-interest. If China went under, so would many of them. The US economy is not even remotely strong enough to withstand the short-term impact of a China economic collapse, as it would ripple through almost every market—from financial assets to commodities to interbank lending to insurance…..
…. China bears have to wait for hubris-driven political and power over-reach, resulting in disastrous decisions that topple the applecart. Alternatively, wait for a meteor strike that brings down the houses of cards globally, including the US stock market. [Link]
(3) Mint, 26th October 2020, ‘It’s Beijing that will eventually rescue the world from China’:
The pathology of global hegemony and dominance always reveals two underlying maladies: hubris and insecurity. They seal the fate of empires and hegemons…..History reminds us that the best antidotes for excess and overreach are excess and overreach. That lesson has eluded many, including China. [Link]

Bush family foundation’s funding and other links

(1) A Bush Family Foundation takes 5 million dollars in funding from a charity which has ties with CCP:

The group, which was founded by Neil Bush, a brother to former President George W. Bush and former Florida Gov. Jeb Bush, goes by the name Bush China Foundation for short. Its goal, according to its website, is to build “a constructive relationship” between the U.S. and China.

But a written agreement published by Axios reveals that the Bush China Foundation agreed in 2019 to accept $5 million over five years from the China-United States Exchange Foundation, an organization that’s been criticized as a key part of China’s international propaganda efforts. [Link]

(2) Professor Peter Nolan’s bias towards China is well-known. He finesses it well here. Shameful. [Link]

(3) Read it last night. China’s ‘fake news’ factory is good reporting and a good story. At one level, you have to admire them for thinking through all aspects – from the strategy to the tactics. This is warfare at every level. [Link]

Well, there is nothing to see in all of these, at one level. If you had read ‘The Hidden Hand’, none of the above is news. Depressing all the same. Niall Ferguson’s ‘Chimerica’ formulation has grown very deep roots in practice, even though he disowned it.

Let us move on to other matters. Germany ain’t what it used to be, it seems.

(4) This is a very good article in ‘The New Republic’ about the Wirecard Scandal by Professor Adrian Daub at Stanford University:

This may be the most bizarre aspect of the Wirecard scandal: the fact that, in the middle of a massive fraud investigation, someone talked Angela Merkel into shilling for the embattled company in Beijing. And that someone seems to have been zu Guttenberg. “Why would Merkel have believed zu Guttenberg, a proven liar?” the sociologist Oliver Nachtwey wondered. The answer appears to be that, just as Wirecard simulated a global presence to bilk German investors, zu Guttenberg simulated worldliness to pull the wool over the eyes of German politicians, voters, and journalists. No wonder the two found each other. …..

…. Germany’s truly major scandals benefit companies, not politicians. Take, for example, Germany’s recent attempt at introducing a toll system on the autobahn that only applied to non-Germans, which was predictably nixed by the EU courts. The minister who had spearheaded the project had signed deals with various contractors before knowing whether the toll system would ever happen, which—again, predictably—caused a massive hole in the government’s coffers and made some companies very rich. But it doesn’t seem like he personally profited, and he remains in office. [Link]

(5) This tendency is universal, in individuals, institutions and in sovereigns:

During this transfer, German politics retained an old paranoid thinking about the economy. Just as German nationalism after World War I had its “stab in the back” myth to explain how the German army had lost the Great War, so postwar Germans tend to see secret plots to stymie their obviously superior economic power whenever their companies are found to have violated international norms. Nachtwey, who briefly worked with Volkswagen in the wake of the company’s notorious emissions scandals, says that even as managers were going to jail and the lawsuits piled up, higher-ups “talked privately about how all of this was just an element to weaken V.W. in the U.S., because we’re too strong.” [Link]

(6) Free testing for Covid in Germany and the frauds it has spawned!:

https://www.tagesschau.de/investigativ/wdr/corona-schnelltest-zentren-101.html (you have to use a translation service to read this)

(7) Fed warned DB over anti-money laundering backsliding (https://www.wsj.com/articles/fed-warned-deutsche-bank-over-anti-money-laundering-backsliding-11622390670 – May 30th, 2021)

(8) Look at the cover of ‘Der Spiegel’ – this is so-called conservative and staid Germany (https://twitter.com/EconguyRosie/status/1400830310225526788/photo/1)

Finally, one for the road:

Many of you might have read this already: Italian artist sells invisible sculpture for more than $18000 (https://www.newsweek.com/italian-artist-sells-invisible-sculpture-more-18000-1596608)

CEO longevity, corruption in China – Monday morning academics

(1) The NBER monthly digest for June 2021 has an article on how CEOs in stressful situations die younger than those. On the face of it, sounds obvious. Specifically, they focus on hostile takeover and the challenges of a financial downturn. Their conclusions?

(1) Working an additional year in a legal environment with greater takeover protection lowered the annual mortality rate by about 5 percent for a typical CEO, increasing his or her lifespan by just over two years. (2) CEOs who were in office during industry-wide distress, on average, died 1.4 years earlier than those who did not experience such shocks. (3) The apparent age of CEOs in industries that suffered the most during the crisis (of 2008) rose by about 1.2 years more than that of the CEOs in non-distressed businesses.

So, more broadly, “stricter governance and economic downturns constitute a substantial personal cost for CEOs in terms of their health and life expectancy.” The paper summary is here.

(2) Considering this, it is not a surprise that decision-making skills are more rewarded in the corporate world. But, is the reward worth it, in the light of the above? Another summary in the same June 2021 NBER Digest says, “Employers have become more willing to pay a premium for experienced, higher-skilled employees with greater cognitive ability because jobs now require more, and more accurate, decisions.”

As automation has improved, machines increasingly have substituted for workers in jobs involving routine tasks predictable enough to be scripted ahead of time. The tasks required of those in the remaining jobs are increasingly open-ended, and doing good work requires the ability to make good decisions. In The Growing Importance of Decision-Making on the Job (NBER Working Paper 28733), David J. Deming calculates that the share of jobs requiring employees to be able to make these good decisions rose from 6 percent in 1960 to 34 percent in 2018. Nearly half of the increase occurred after 2007. [Link]

Making decisions is stressful, however. That may reduce their longevity as per the research cited in (1) above.

(3) I was searching for a recent article in the newspapers on the renewed corruption-related purge in China. I came across an article in Nikkei Asia dated 26th May 2021:

The number of government officials involved in corruption cases who turned themselves in jumped by half in 2020 to 16,000, apparently in an effort to demonstrate President Xi Jinping’s ability to project authority throughout the Communist Party hierarchy ahead of the 2022 edition of the twice-a-decade party congress. [Link]

While searching for this link, came across a useful article in WSJ published on the 1st November 2019 by Nathaniel Taplin. It cited some good academic studies done in China on how corruption did facilitate economic growth in China. One is a NBER paper titled, ‘Special Deals with Chinese characteristics‘ published in May 2019. It is available here. There was also a reference to another interesting paper, ‘Beyond Weber: Conceptualizing an alternative ideal type of bureaucracy in developing contexts‘ published in September 2017. The abstract does make for interesting reading:

The study of public administration in developing countries requires that we look beyond the Weberian model as the only ideal type of bureaucracy. When we assume that there exists only one gold standard of public administration, all other organizational forms that do not conform to the Weberian ideal are dismissed as corrupt or failed. Drawing on neo‐institutional economics, I introduce an alternative ideal type of bureaucracy found in contemporary China. This model, which I call bureau‐franchising, combines the hierarchical structure of bureaucracy with the high‐powered incentives of franchising. In this system, public agencies can rightfully claim a share of income earned to finance and reward themselves, like entrepreneurial franchisees. Yet distinct from lawless corruption, this self‐financing (or prebendal) behavior is sanctioned and even deliberately incentivized by state rules. Although such a model violates several Weberian tenets of “good” bureaucracy, it harnesses and regulates the high‐powered incentives of prebendalism to ameliorate budgetary and capacity constraints that are common in developing countries like China. [Link]

(4) In a way, it makes us reflect on the puritanical approach that India has adopted or is unable to shed. In 2018, the Supreme Court had extended the application of the ‘Prevention of Corruption’ Act to private banks too. Already, Dr. Y.V. Reddy had made a case for exempting public sector banks from its purview way back in 2002. Now, we have a case of ‘Not only not but also’. Aankhi Ghosh and I wrote in Mint recently that this needs to be removed and that bank officials must be exempt from the application of the provisions of PoC Act. They must be subject to the provisions of the Indian Penal Code alone for acts of corruption.

Therefore, it was a nice coincidence that veteran journalist TCA Srinivasa Raghavan had shared a column he had written in 2013 on this very issue: whether tighter bank supervision by the regulator helped reduce frauds or corruption in bank lending. The conclusion was NO. He had cited a study that made the argument. It is from 2005. The authors favour more disclosure and ‘market discipline’ or private discipline. I do recall that more disclosure is what Deep Narain Mukherjee too called for, in one of his columns, whether for Mint or for BloombergQuint. I cannot locate it.

TCA (SR) had also cited a work of Banerjee, Duflo and Cole (2004) on whether the vigilantism of the Central Vigilance Commission in India was helpful or detrimental. Well, it surely was detrimental to credit creation. TCA’s column can be found here. The two citations are mentioned in his column.

The de-emphasising of bank supervision in one of the papers that TCA (SR) had cited then helps to put the article in ET on RBI’s human resource challenge in strengthening the bank supervision department in perspective. As per the article, RBI employees are reluctant to opt for this department lest they are ‘stuck’ there. But, without getting stuck for a number of years, one does not become a specialist. Clearly, there is a trade-off.

What is left to investigate?

I just finished reading the article in ‘Newsweek’ on how the Wuhan Lab-Leak theory surfaced. It is very well written. I read the one in VanityFair (VF) as well. I found the story in Newsweek well put together. But, the VF article has many exhibits that lend it some more authenticity and drama. Of course, the article in Newsweek too has many links.

The Indian ‘seeker’ is given far better coverage in the ‘Newsweek’ story than in VF. The efforts of Team DRASTIC, I must say, gives one goosebumps. In its own way, it leaves us optimistic about the world.

More than a month ago, Ian Birrell had praised (‘The Covid dissidents taking on China’, 13th April 2021) the work of Team DRASTIC in an article for Unherd.com (a site that I often visit and recommend. They get the balance right):

This nugget about Dr Feng’s disturbing dual role — as a voice of the WHO study into pandemic origins while also party to a Communist dictatorship’s clampdown on unfettered scientific discussion — was dug out by an Indian architect and film-maker, who shared it earlier this month on social media under his moniker ‘The Seeker’. “I know how to use a search engine,” he told me.

Last year, he made an even more significant discovery: a thesis that discussed how three miners died of a mysterious respiratory disease, eerily similar to Covid 19, they caught while clearing out bat droppings in a cave network in Yunnan, southern China. The trio were infected in an abandoned copper mine where scientists from Wuhan Institute of Virology sampled RaTG13, the closest known relative of Sars-Cov-2.

‘The Seeker’ is a member of Drastic, an informal guerilla group of internet sleuths, scientists and data experts who have spent the past year scouring a multitude of digital sources for such vital pieces of evidence. Some members have expertise in areas such as microbiology, genetics and virology. Others are data specialists, engineers or simply obsessed with discovering the truth about the origin of this wretched pandemic. Some hide their identities; others are open. They have been accused of hacking and fiercely deny it. Occasionally they hurtle down blind alleys.

Yet there is no doubt their collective efforts — and some of the illuminating evidence they have uncovered — have been crucial in challenging both China and the scientific establishment to ensure the lab leak theory is properly investigated. “We have exposed so many things they wanted to cover up, while there has been too much geo-politics around the issues,” said Gilles Demaneuf, a French data scientist who works at a New Zealand bank and is another Drastic member. “Many people now accept there is a possibility that a lab leak was the cause of the pandemic and that this is not a conspiracy theory as claimed at the outset.”

It has been fascinating to see, in the course of my investigations over the past year, how this group of activists — in tandem with few brave scientists — has forced the lab leak hypothesis from the shadows. …

…. Another member of the team is Monali Rahalkar, an Indian microbiologist, who wondered why prominent scientists seemed so certain the virus had natural zoonotic origins. So she started ploughing through scientific papers during her lockdown in Pune last March. …. Working with her husband, a fellow scientist, she carried out “blast” tests on genetic sequences taken from another strain of bat coronavirus found by Professor Shi Zhengli — the celebrated Wuhan-based virologist known as “Batwoman” for her expeditions to gather samples in caves where the mammals roost hundreds of miles from her lab. [Link]

Ian Birrell himself is worth following on matters pertaining to this virus and the pandemic. On 26th May 2021, he wrote in Unherd.com:

Some analysts believe the shocks could be so seismic that President Xi Jinping would be deposed in a bid to recover face — and possibly that the entire Communist apparatus of control might crumble amid intense public anger. These views highlight the geo-political importance of the debate over the origins issue. …

…. “China will do whatever it can to deny it,” said Lianchao Han, a leading dissident and former Chinese government official. “Xi will mobilise his massive propaganda machine to fabricate stories and facts to shake off his responsibility and liabilities. We already passed the point to depose him for mishandling the pandemic if it’s proved to a lab leak.”….

….. It is a grim sign of the times that so many in the media — with a few noble exceptions — felt more inclined to believe a highly repressive Communist regime rather than an elected US president. [Link]

The last line above is critical. That shows the extent of corruption and capture of Western institutions and individuals by Chinese influence, by the lure of Chinese market and money, a point that Mike Pompeo stresses in his conversation with Bari Weiss.

That is why it is important that, in his latest short piece for Wall Street Journal, Nicholas Wade calls out Dr. Kristian Andersen as well. That man has a huge conflict of interest on account of the sheer fact that he is a virologist even if he was not pursuing G-o-F research or has collaborated with the Wuhan Institute of Virology.

Just as in the world of marketing and selling, anyone who has a bullish (positive) view of the product they are selling has a natural conflict of interest. What else would one expect from them? So, they have to give a more compelling proof of their integrity and conviction than others have to. Mr. Andersen is in that space. Hence, as a commoner, I remain unimpressed by his protestations and his seeking refuge under ‘Science’.

Frankly, after reading the Newsweek article, I feel there is really nothing left to investigate. Team DRASTIC has covered all the bases. Now, Angus Dalgleish and Birgor Sorensen (Mr. Dalgleish created the world’s first HIV vaccine) have published their paper as well in which they state that they establish beyond reasonable doubt that the virus was not  natural. Their paper is here.

What is there to investigate? Except to cover up, perhaps or throw some doubt into the wheels of this seemingly unstoppable juggernaut?

What follows are key extracts from the article in Newsweek:

  • Shortly after The Seeker posted the theses, China changed the access controls on CNKI so no one could do such a search again.
  • When asked about the missing database in January 2021, Shi Zhengli explained that it had been taken offline during the pandemic because the WIV web server had become the focus of online attacks. But once again, DRASTIC poked holes in this explanation: the database was taken down on September 12, 2019, shortly before the start of the pandemic, and well before the WIV would have become a target.
  • In the WIV’s grant applications and awards, The Seeker found detailed descriptions of the Institute’s research plans, and they were damning: Projects were underway to test the infectivity of novel SARS-like viruses they’d discovered in human cells and in lab animals, to see how they might mutate as they crossed species, and to genetically recombine pieces of different viruses—all being done at woefully inadequate biosecurity levels. All the elements for a disaster were on hand.
  • The Wuhan Institute of Virology had spent years collecting dangerous coronaviruses, some of which it has never revealed to the world. It was actively testing these viruses to determine their ability to infect people, as well as what mutations might be necessary to enhance that ability—likely with the ultimate goal of producing a vaccine that would protect against all of them. And the ongoing effort to cover this up implies that something may have gone wrong.
  • WIV researchers had been so concerned about a new SARS-like outbreak that they’d tested the blood of neighboring villagers for other cases. And they had known the genetic sequences for the eight other SARS-like viruses from the mine—which could have helped researchers to understand more about SARS-CoV-2 in the early days —long before the pandemic started, and had kept the information to themselves, until DRASTIC called them out.
  • If there had been any remaining doubt about the WIV’s pattern of deception, these new theses put it to rest. They indicated that the WIV researchers had never believed a fungus had killed the Mojiang miners, contradicting Shi’s remarks in Scientific American and elsewhere. In fact, WIV researchers had been so concerned about a new SARS-like outbreak that they’d tested the blood of neighboring villagers for other cases. And they had known the genetic sequences for the eight other SARS-like viruses from the mine—which could have helped researchers to understand more about SARS-CoV-2 in the early days —long before the pandemic started, and had kept the information to themselves, until DRASTIC called them out.

Prof. Bret Weinstein is his usual mix of optimistic and cautious self as to the lessons of the recent revelations. At one level, he is happy that nature is not so brutal and merciless. At another level, he wonders if humans and the corrupted institutions of science and media are capable of or are willing to learn at all:

…. we should hope that Covid-19 was caused by human error. As terrible as the implications of that are — millions dead, incalculable suffering and loss; all caused by scientific misjudgement — at least it tells us how to make ourselves safer going forward: we should stop doing the thing that creates that danger. If, on the other hand, Covid-19 is Mother Nature’s handiwork, then logically we are condemned to a sequence of pandemics; some natural, others accidental, some better and others far more deadly. Not a happy scenario by any stretch….

…. There are innumerable unknown viruses in nature, a tiny fraction of which have some potential to infect people. But I strongly suspect that we, collectively, have an exaggerated sense of how likely we are to face novel zoonotic pandemics of the scale of Covid-19 or worse in the future…..

….. SARS2 is a master of this trick, but the closest wild relatives seem to be neutralised, with spike proteins built to invade horseshoe bat cells, not human cells. To trigger a pandemic in people they need substantial evolutionary retooling…..

….. When SARS2 first appeared in Wuhan in late 2019, it was, from the very first moment, pre-adapted to spread through the human body and from one person to another. That’s all but impossible — a major evolutionary mystery….

….. as it stands, science is plagued by a system of perverse incentives in which scientists are condemned to constantly compete for jobs and grant money just to stay in the game. The repercussions of this have been clear for decades, as scientists exaggerate, distort and mislead in order to get their own work (or their field’s work) funded….

…. In order to win at the funding and prestige game — in order to deliver a really great pitch – -you have to be a true believer. Indeed, I suspect the “Gain of Function” research community really thought they were racing against the clock to save the world; experimenting in a reckless manner was a risk they were willing to take. But they were like drunks behind the wheel, with the rest of the world unwittingly along for the ride….

….. But the biggest danger exposed by Covid-19 comes from our universally corrupted institutions. If SARS2 emerged from the lab, then the failure of our institutions is the root cause, and fixing them should be our top priority.

That will no doubt be a Herculean task. Our virologists, the press, the international regulatory bodies and all the major social media platforms are already dragging their feet, doing everything in their power to avoid learning the lesson the virus’s likely origin. And in doing so, they are preventing us from learning it, too. In the coming years, if the world needs saving from anything, it is surely that. [Link]

Unsurprisingly, his diffidence that all those who needed to learn their lessons are unlikely to do so is echoed by Freddie Sayers too. He analysed Facebook’s cryptic admission that it would now not censor views that hold that the virus could be man-made:

….. the trend towards removing and shadow-banning content on still-developing controversies on the grounds of official untruth is censorship of a different order. In the realms of science and politics, the “truth” is always evolving. It is an epistemological fantasy to assume that it can be determined using censorship rather than inquiry…..

….. Big Tech got its “misinformation” policy wrong on the lab leak hypothesis — and, if its behaviour in the past week is any indication, it hasn’t learnt its lesson. [Link]