Quotulatiousness

February 2, 2012

Is Sino-Forest a typical Chinese company?

Filed under: China, Economics, Government, Law — Tags: , , , — Nicholas @ 09:52

Colby Cosh posted an initial article on the investigation into Sino-Forest’s business back in June:

Timber company Sino-Forest is locked in a fascinating battle for survival against Carson Block, a stock analyst with a mixed record of publicity attacks on Chinese-based enterprises. With professional analysts reluctant to say what they make of Block’s “strong sell” report on Sino-Forest, I’m in no position to endorse it as a piece of financial advice or investigative journalism. Considered strictly as entertainment, however, the report is remarkable.

Block has documented that Sino-Forest operates with extraordinary opacity for a company whose holdings are surely very widely distributed — particularly, one assumes, within Canada. Sino-Forest claims to be doing hundreds of millions of dollars’ worth of sales through mostly unidentified “authorized intermediaries” in China — traders who are apparently happy to let the company buy title to trees, hold them as they appreciate, take on the bulk of the costs and risks in the meantime, and then snap up revenues when the trees are eventually converted into wood products. Block, having poked around a bit in the literal Chinese backwoods, questions whether much if any of the reported underlying activity is happening.

[. . .]

Sino-Forest is refusing, despite intense pressure, to make a full disclosure of the identities of the “authorized intermediaries” who are making its money. The company claims that to do so would put it at a competitive disadvantage, which makes one wonder why its business model ought to depend so heavily on sheer obscurity. One possible answer is that Sino-Forest’s real, fundamental business is some sort of cryptic regulatory arbitrage; that seems like a game potentially worth playing with paper assets in places that have a strong rule of law, but it is surely a dangerous one in a nominally Communist country, where a nationalization could be arranged in the space of an afternoon. (Or where some regional Party functionary could simply be bribed to “lose” crucial paperwork.)

Today, he posted a follow-up report:

Could a curious investor look at actual maps of timber controlled by Sino-Forest agents, you ask? Well, you see, it’s not exactly kosher for foreigners to carry around maps of remote parts of China. You can borrow them from forestry officials if you really need to. Will the local forestry bureaus confirm Sino-Forest’s claims about plantations operated by its agents? Well, sometimes they’ll give you a certificate of sorts, for all the good it might do. “The confirmations are not title documents, in the Western sense of that term,” the committee report notes. (As I understand it, the Western meaning of “title document” is that it gives one an unquestioned, justiciable claim to ownership of something, whether the Party or the Army or the good Lord in heaven approve or not.)

[. . .]

The impression given is that you need influential “backers” to do business in China. The question for the Western investor, though it’s probably now moot, is whether the real role of these backers is to help exploit Chinese resources for the benefit of the Western shareholders or to help fleece Western shareholders for the benefit of Chinese suppliers and bureaucrats.

As Jon, my former virtual landlord puts it, this is a hobby horse I like to ride now and again.

January 23, 2012

The EU culture war against Hungary

Filed under: Europe, Government, Media — Tags: , , , , , — Nicholas @ 10:07

Frank Furedi on the confused situation between the European Union bureaucracy and the government of Hungary:

Thirty or 40 years ago, the way that the EU and the IMF are behaving towards Hungary would have been described as a classic example of neo-colonial pressure. Unlike Greece, Hungary is not simply being lectured about the need to sort out its economy — it has also been subjected to a veritable culture war. As far as the EU and the Western media are concerned, the real crime of the Hungarian government is not so much its inept economic strategy as its promotion of cultural and political values that run counter to what is deemed correct in Brussels.

The Brussels bureaucracy has long regarded Hungary as a society in danger of being engulfed by white savages. In 2006, when people in Budapest rioted against their corrupt government, the EU and sections of the Western media described the demonstrators as right-wing mobs posing a threat to democratic values. At the time, Brussels weighed in to support its man in Budapest, Ferenc Gyurcsany, the Socialist prime minister. The fact that Gyurcsany had lied to cover up the scale of Hungary’s massive budget deficit, and that he had admitted his dishonesty to some of his close colleagues, did not stop his mates in the EU from singing his praises. Poul Nyrup Rasmussen, president of the Party of European Socialists, was quick to rush to Gyurcsany’s defence, claiming he was the ‘best man to make the reforms that Hungary needs’.

What the Western media overlooked was that the corrupt Gyurcsany government was complicit in creating the conditions for mass demoralisation and cynicism. It was this EU-backed regime that did much to unravel and damage public life in Hungary. Gyurcsany’s humiliating electoral defeat in 2010, and the triumph of Viktor Orban and his Fidesz party, meant that the EU’s placeman was replaced by an autocratic nationalist and populist prime minister.

[. . .]

But then, the EU itself has no inhibitions about imposing its values on to its target audiences. It, too, does not want its constitutional proposals held up to public scrutiny. Sometimes it rules by decree and refuses people’s requests to hold any referenda on EU-related matters, on the basis that the issues are far too complex for ordinary people to understand. Evidently, the EU commissioners have read their Voltaire. To recall — it was Voltaire who praised the Russian absolute monarch Catherine the Great’s invasion of Poland and celebrated her ability ‘to make fifty thousand men march into Poland to establish there toleration and liberty of conscience’. The EU does not have 50,000 men but it does have many other resources for executing its culture war. Voltaire was tragically mistaken in his belief that deploying coercion was a legitimate tool for forcing people to change their beliefs — but at least he actually believed in tolerance and freedom of conscience. In contrast, the EU technocracy has little time for genuine tolerance.

January 8, 2012

George F. Will on big government

Filed under: Bureaucracy, Economics, Government, Politics — Tags: , , , — Nicholas @ 10:54

Even fans of bigger government should recognize the accuracy of this short summary:

Liberals have a rendezvous with regret. Their largest achievement is today’s redistributionist government. But such government is inherently regressive: It tends to distribute power and money to the strong, including itself.

Government becomes big by having big ambitions for supplanting markets as society’s primary allocator of wealth and opportunity. Therefore it becomes a magnet for factions muscular enough, in money or numbers or both, to bend government to their advantage.

The left’s centuries-old mission is to increase social harmony by decreasing antagonisms arising from disparities of wealth — to decrease inequality by increasing government’s redistributive activities. Such government constantly expands under the unending, indeed intensifying, pressures to correct what it disapproves of — the distribution of wealth produced by consensual market activities. But as government presumes to dictate the correct distribution of social rewards, the maelstrom of contemporary politics demonstrates that social strife, not solidarity, is generated by government transfer payments to preferred groups.

[. . .]

The tax code, government’s favorite instrument for distributing wealth to favored factions, has been tweaked about 4,500 times in 10 years. Generally, the beneficiaries of these changes are interests sufficiently strong and sophisticated to practice rent-seeking.

Not only does redistributionist government direct wealth upward; in asserting a right to do so it siphons power into itself. A puzzling aspect of our politically contentious era is how little contention there is about the ethics of coercive redistribution by progressive taxation and other government “corrections” of social outcomes it considers unethical or unaesthetic.

December 31, 2011

The “Reverse Pelzman” Effect

Filed under: Americas, Bureaucracy, Economics — Tags: , , , — Nicholas @ 10:35

A semi-serious discussion of a real-world experiment in getting rid of driving licenses:

Those of us who are econ geeks will know about the Pelzman Effect. Regulations that supposedly make us safer (say, seatbelts or cycling helmets) don’t actually make us safer as behaviour changes to take account of the new safety. Almost as if there’s what we consider to be an acceptable risk to take and reducing it in one manner just allows us to be silly in another so as to maintain that risk we’re comfortable with. What I didn’t know (but better econ geeks than I might have done already) is that there is a Reverse Pelzman Effect.

Exploiting an interesting natural experiment, the authors of that paper are able to show that we should abolish driving licences. The various States of Mexico found that bribery was impossible to avoid when attempting to gain a licence. So, to varying degrees, they changed their issuance system, some deciding simply not to have them any more. So, of course, death rates from car accidents went up, didn’t they?

Erm, actually, no, they didn’t. Those places that didn’t bother with licences any more, allowing absolutely anyone at all to get in and drive, saw no change in such death rates any different from those that had now (well, hopefully) incorruptible issuance systems.

December 12, 2011

Defining crony capitalism

Filed under: Economics, Government, Liberty, Politics — Tags: , , , , — Nicholas @ 14:51

Bill Frezza explains what crony capitalism is and how it differs from free market capitalism:

If defenders of capitalism hope to win over fair-minded fellow citizens who are honestly upset and confused, we need to define these terms and answer some basic questions. In what ways are Crony Capitalists and Market Capitalists the same and in what ways are they different? What makes the former immoral and the latter virtuous? Why are Crony Capitalists a threat to democracy and prosperity while Market Capitalists are essential to both? How is it that ever larger numbers of Market Capitalists are being corrupted, turning into Crony Capitalists? And what can we do to reverse that trend?

All capitalism is driven by greed — the desire to not only achieve economic security, but to amass pools of capital beyond one’s basic needs. This capital can fuel the kind of conspicuous consumption that offends egalitarians. But it also finances investments in new products and businesses, without which the economy cannot grow. [. . .]

What makes Crony Capitalists different is their willingness to use the coercive powers of government to gain an advantage they could not earn in the market. This can come in the form of regulations that favor them while hindering competitors, laws that restrict entry into their markets, and government-sponsored cartels that fix prices, grant monopolies, or both.

Crony Capitalists are also more than happy to help themselves to money from the public treasury. This can come from wasteful or unnecessary spending programs that turn government into a captive customer, subsidies that flow directly into their coffers, or mandates that force consumers to buy their products.

[. . .]

Beyond these obvious Crony Capitalists lies a slippery slope designed to attract and entrap Market Capitalists: the tax code. By setting nominal corporate tax rates high while marketing tax breaks to specific companies and industries, Congress assures itself a steady stream of campaign contributions from companies looking to lighten their tax load. While there is no shame in reducing one’s tax burden from 35% to a more globally competitive 20%, is it any wonder that people get sore when some extremely profitable corporations manage to get their tax burden down to nearly 0%?

December 1, 2011

Grim situation for North Korean civilians gets grimmer

Filed under: Asia, Media, Military — Tags: , , — Nicholas @ 08:58

Strategy Page reports that the North Korean government is trying to distract the population from a declining economy with talk of an invasion from South Korea:

North Korean media is taking an ominous turn. For much of the year, the big story was that everything would change in 2012, with new housing and more of everything. That failed, as it is obvious to all that the 2012 promises are not going to be fulfilled. The new pitch urges North Koreana to eat less and save food. That military is being praised, as is the artillery attack on South Korea (Yeonpyeong Island) a year ago.

The most visible aspects of the 2012 promises (and the centennial of North Korean founder Kim Il Sung) are many new construction projects in the capital. This effort is not only way behind schedule, but is putting up poorly built structures and killing hundreds of students and others who have been conscripted as unskilled labor. The government puts a positive spin on the construction, but darker views get around, despite government efforts to control the news.

While North Koreans are warned about hunger, the government is silent on why they are going to be cold. The government has greatly increased coal exports to China, meaning prices have doubled in some parts of North Korea. The government denies that exports are up sharply, but won’t say anything about the rising prices. Meanwhile, illegal tree cutting is increasingly common as people seek fuel with which to survive the cold weather. Satellite photos show the sharp difference between forestation in the north and south. Foreign aid groups believe that at least three million North Koreans are in danger of starvation. Many more North Koreans are eating less. But many North Koreans are living better. The market economy, but the legal markets and the black market, increasingly thrive.

November 26, 2011

Incentives matter, especially in policing

Filed under: Law, Liberty, USA — Tags: , , , , — Nicholas @ 10:31

Radley Balko looks at how federal government incentives to local police departments are encouraging them to concentrate on minor drug offenders instead of helping the victims of violent crime:

Arresting people for assaults, beatings and robberies doesn’t bring money back to police departments, but drug cases do in a couple of ways. First, police departments across the country compete for a pool of federal anti-drug grants. The more arrests and drug seizures a department can claim, the stronger its application for those grants.

“The availability of huge federal anti-drug grants incentivizes departments to pay for SWAT team armor and weapons, and leads our police officers to abandon real crime victims in our communities in favor of ratcheting up their drug arrest stats,” said former Los Angeles Deputy Chief of Police Stephen Downing. Downing is now a member of Law Enforcement Against Prohibition, an advocacy group of cops and prosecutors who are calling for an end to the drug war.

“When our cops are focused on executing large-scale, constitutionally questionable raids at the slightest hint that a small-time pot dealer is at work, real police work preventing and investigating crimes like robberies and rapes falls by the wayside,” Downing said.

[. . .]

Several NYPD officers have alleged that in some precincts, police officers are asked to meet quotas for drug arrests. Former NYPD narcotics detective Stephen Anderson recently testified in court that it’s common for cops in the department to plant drugs on innocent people to meet those quotas — a practice for which Anderson himself was then on trial.

At the same time, there’s increasing evidence that the NYPD is paying less attention to violent crime. In an explosive Village Voice series last year, current and former NYPD officers told the publication that supervising officers encouraged them to either downgrade or not even bother to file reports for assault, robbery and even sexual assault. The theory is that the department faces political pressure to produce statistics showing that violent crime continues to drop. Since then, other New Yorkers have told the Voice that they have been rebuffed by NYPD when trying to report a crime.

November 24, 2011

US to be crushed by Oriental economic juggernaut, film at 11

Filed under: China, Economics, Japan, Media — Tags: , , , — Nicholas @ 09:27

Do any of these statements sound familiar?

  • “I don’t mean to be an alarmist, but I get the uneasy feeling that America is history”
  • “The power behind the [. . .] juggernaut is much greater than most Americans suspect, and the juggernaut cannot stop of its own volition, for [it] has created a kind of automatic wealth machine, perhaps the first since King Midas.”

This kind of statement can be found in all the prestigious newspapers, opinion journals, and magazines . . . in the late 1970s through the late 1980s. The economic juggernaut of the day was Japan. It was poised to crush the feeble remnants of American capitalism with the all-powerful keiretsu, Japan’s corporate conglomerate organizations. The strong would smash the weak, leaving America (and the rest of the Anglosphere) in the dust. Just in case you didn’t follow economic history, it didn’t happen.

Today, the economic bogeyman is China:

“We are getting our clock cleaned by Chinese state capitalism,” wrote Robert Kuttner, now editor of The American Prospect, earlier this year at The Huffington Post. Massachusetts Institute of Technology economist Simon Johnson piled on at the annual conference of the American Economic Association, declaring, “The age of American predominance is over. The [Chinese] Yuan will be the world’s reserve currency within two decades.” The conservative Citizens Against Government Waste even aired a television commercial featuring a Beijing economics class in 2030 in which a professor explains how America became indebted to China. The professor concludes, “So now they work for us.” The class chuckles knowingly.

This gloomy message of American decline relative to China appears to be seeping into popular consciousness. An April 2011 poll by Xavier University found that “a stunning 63 percent believe that the Chinese economy is more powerful than the US economy.”

“The U.S. could lose its status as the world’s biggest economic power within five years,” reported The Daily Mail in April. The Mail article was based on calculations released by the International Monetary Fund projecting that total Chinese GDP, adjusted for purchasing power, will surpass U.S. GDP by 2016.

Can that be? Let’s do the math: China’s total GDP is around $6 trillion today. Assuming 10 percent GDP growth for the next 20 years, China’s GDP would rise to $40 trillion. If the U.S. economy grew at, say, 3 percent a year, total GDP would be $27 trillion. Back in 2007, before the financial crisis, the investment bank Goldman Sachs issued a report projecting that Chinese GDP would be $26 trillion in 2030, compared to $23 trillion for the U.S. It bears noting that current Chinese purchasing power per capita is about $6,000, compared to $46,000 for Americans.

That’s not to say that it’s impossible — the longer the US government struggles to avoid cutting back, the more likely it is that the US will enter a long economic decline — but China has economic problems a-plenty.

October 31, 2011

China’s increased output of scientific papers masks deeper problems

Filed under: China, Media, Science — Tags: , , , — Nicholas @ 12:01

Colby Cosh linked to an interesting press release from the Chinese Academy of Sciences, which shows a surge in published papers from China, but a significant drop in the rate at which those papers are cited:

Chinese researchers published more than 1.2 million papers from 2006 to 2010 — second only to the United States but well ahead of Britain, Germany and Japan, according to data recently published by Elsevier, a leading international scientific publisher and data provider. This figure represents a 14 percent increase over the period from 2005 to 2009.

The number of published academic papers in science and technology is often seen as a gauge of national scientific prowess.

But these impressive numbers mask an uncomfortable fact: most of these papers are of low quality or have little impact. Citation per article (CPA) measures the quality and impact of papers. China’s CPA is 1.47, the lowest figure among the top 20 publishing countries, according to Elsevier’s Scopus citation database.

China’s CPA dropped from 1.72 for the period from 2005 to 2009, and is now below emerging countries such as India and Brazil. Among papers lead-authored by Chinese researchers, most citations were by domestic peers and, in many cases, were self-citations.

Being published is very important for sharing discoveries and advancing the careers of the scientists, but it’s more important that those publications be read and referenced by other scientists. Self-citations are akin to self-published works: it doesn’t guarantee that the work is useless, but it increases the chances that it is.

Perhaps worse than merely useless publication is the culture of corruption that has grown up around the scientific community:

In China, the avid pursuit of publishing sometimes gives rise to scientific fraud. In the most high-profile case in recent years, two lecturers from central China’s Jinggangshan University were sacked in 2010 after a journal that published their work admitted 70 papers they wrote over two years had been falsified.

[. . .]

A study done by researchers at Wuhan University in 2010 says more than 100 million U.S. dollars changes hands in China every year for ghost-written academic papers. The market in buying and selling scientific papers has grown five-fold in the past three years.

The study says Chinese academics and students often buy and sell scientific papers to swell publication lists and many of the purported authors never write the papers they sign. Some master’s or doctoral students are making a living by churning out papers for others. Others mass-produce scientific papers in order to get monetary rewards from their institutions.

October 21, 2011

Incentives matter, police edition

Filed under: Law, Liberty — Tags: , , , , , — Nicholas @ 10:00

Jonathan Blanks explains that the incentives provided to police officers clearly do influence their behaviour:

Last week, former undercover police officer Stephen Anderson told the New York State Supreme Court that planting drugs on innocent people was so common that it didn’t even register emotionally to him. The story is starting to get traction in the media as an egregious example of police corruption, but it’s notable only because of the admission to the practice in open court. Each year, there are hundreds of cases in which police officers are caught stealing, using, selling, or planting drugs or pocketing the proceeds from drug busts. Despite the obligatory PR protestations that any given instance of corruption is an isolated case, the systemic, legal, social, and economic incentives in every law enforcement agency in America combine to make police corruption virtually inevitable. And with no other category of crimes are these incentives stronger than with drug crimes.

Anderson testified that drugs would be seized from suspects at a given bust, divided, and then used again as evidence against other people on site (or at a time later) who had nothing to do with the initial arrest. This was, in part, due to established drug arrest quotas the officers needed to meet. As public servants, police departments face the same budgetary pressures as any other government entity and thus their officers are required to meet certain benchmarks set by the powers that be. Added to the normal budgetary justification, however, many police officers are in the position to confiscate cash and property that can be sold at auction thanks to civil asset forfeiture laws. Many departments across the country keep a percentage or the entirety of forfeiture proceeds, so pressure to maintain a certain level of drug arrests is something straight out of Public Choice: 101.

September 20, 2011

China’s local and regional governments may be sitting on massive hidden debts

Filed under: China, Economics, Government, Law — Tags: , , — Nicholas @ 12:13

As with the US or Canadian government’s debt, not all debt is held at the federal level. It may take some digging to discover what the actual debt levels might be, but it’s possible. In China, however, as local governments are forbidden to issue bonds or to borrow from banks, they’ve had to become extremely creative in finding ways to borrow money for their pet projects. Not just creative — at least in some cases — legally dubious:

About 85% of Liaoning province’s 184 financing companies defaulted on debt service payments in 2010 according to a report from the province’s Audit Office. The report also noted that 120 of these borrowers, de facto government agencies, operated at a loss last year.

Since 1994, provinces and lower-tier governments have not been permitted to issue bonds or borrow from banks. Despite the strict prohibition, their debt has skyrocketed as local officials incurred obligations through LGFVs, local government finance vehicles. The central government’s National Audit Office said these companies, at the end of last year, had taken on 10.7 trillion yuan of debt. No one, however, knows the true amount of LGFV indebtedness, and some have calculated the real amount to be more than double the official figure.

Why the disagreement as to the amount of debt? Local governments have gone out of their way to hide borrowings, perhaps in part because of their doubtful legality. As famed economic journalist Hu Shuli points out, new local officials sometimes do not know the extent of obligations left by their predecessors. There have been a number of stratagems employed, from the issuance of illegal government guarantees to the transfer of funds in roundabout routes.

H/T to Jon, my former virtual landlord, for the link.

September 12, 2011

Is the People’s Liberation Army a paper tiger?

Filed under: China, Economics, Military — Tags: , , , , — Nicholas @ 09:36

An interesting article at Strategy Page looks at the myth and reality of China’s army and navy:

You don’t see much in the media about the poor training of Chinese military personnel. You don’t hear much about the poor leadership and low readiness for combat. But all of this is common knowledge in China. There, the military is not walled off from everyone else. Cell phone cameras and the Internet make it easy to pass around evidence (often in the form of “hey, this one is hilarious”). The government tries to play up how modern and efficient the military is, but most Chinese know better, and don’t really care. China is winning victories on the economic front, and that what really counts to the average Chinese.

Meanwhile, U.S. military leaders and defense industries are looking for a sufficiently impressive foe to help scare more money out of Congress. The Chinese Navy (or, more correctly, the Chinese Peoples’ Liberation Army Navy) is now the favorite candidate, for navy and defense industry analysts, to become the new Big Bad. Just how dangerous are these Chinese sailors and their ships? It turns out that, on closer inspection, not very.

This is the sort of thing that what went on during the Cold War. Russian military prowess was hyped by the American military, and their defense suppliers, to justify further increases in defense spending. When the Cold War ended, it was revealed how the Russian military, and defense manufacturers, played the same game. It also revealed that Russian military capabilities were far less than the hype indicated.

The basic weapon for this sort of thing is FUD (Fear, Uncertainty and Doubt). Works every time, although it is difficult to pitch the Chinese navy as a crack force. Most of their ships are elderly, poorly designed and rarely used. Their nuclear subs are worse than the first generation of Russian nukes back in the 1960s. The most modern Chinese ships are Russian made, Cold War era models. Chinese ships don’t go to sea much, not just because it’s expensive, but because Chinese ships tend to get involved in nasty incidents. Like the submarine that killed its crew when the boat submerged (and the diesel engines did not shut down when the batteries kicked in, thus using up all the oxygen.) Breakdowns are more common, as well as a lot of accidents you don’t hear about (weapons and equipment malfunctions that kill and maim.) Nevertheless, the Chinese are working to change this. Ships are going to sea more each year, and troops are getting more training. But unless the corruption is curbed, this could all be wasted.

Of course, if China isn’t the big military threat to the rest of the world, how will the Pentagon get Congress to go along with its perpetual demands for more funding?

July 28, 2011

Signalling failure blamed for high speed rail crash

Filed under: China, Media, Technology — Tags: , , , — Nicholas @ 08:32

This sounds a bit fishy, as this kind of error has been known in railway signal systems for over 100 years: signals that fail to show stop as a default whenever power is lost:

After it was struck by lightning, the signaling device at the Wenzhou South railway station malfunctioned and failed to turn from green to red, An Lusheng, chief of the Shanghai Railway Bureau, told the news agency. He also said workers on duty were inadequately trained and failed to notice the malfunction.

Xinhua’s report, the first official explanation of the cause of the crash, raised further questions about China’s high-speed rail system, one of the world’s largest and most costly public works projects. The accident occurred when one high-speed train rear-ended another that had stalled on the tracks near Wenzhou in Zhejiang Province. High-speed rail has an excellent safety record elsewhere, especially in Japan, which has never had a fatality.

Chinese have flooded microblogging sites with furious complaints about breakneck development without heed to safety. Many also expressed fears of a cover-up, especially after reports that one train car was buried at the site despite the ongoing investigation and only later excavated.

July 26, 2011

The implied relationship between traffic tickets and corruption

Filed under: Economics, Law, Liberty — Tags: , , , — Nicholas @ 09:11

Tim Harford linked to this Forbes graphic showing an interesting correlation:

This nicely illustrates what he wrote in 2006:

An alternative view, popular among the common-sense crowd, is that corruption is a problem in Indonesia because Indonesians are crooks by nature; poor countries are poor because they are full of people who are lazy or stupid or dishonest. I disagree out of faith, rather than because the evidence is compelling. But then, what evidence could there be? You would need to take people from every culture, put them somewhere where they could ignore the law with impunity, and see who cheated and who was honest.

That sounds like a tall order for any research strategy, but the economists Ray Fisman and Edward Miguel have realised that diplomats in New York city were, in fact, the perfect guinea pigs. Diplomatic immunity meant that parking tickets issued to diplomats could not be enforced, and so parking legally was essentially a matter of personal ethics.

Fisman and Miguel found support for the common-sense view. Countries with corrupt systems, as measured by Transparency International, also sent diplomats who parked illegally. From 1997-2005, the Scandinavians committed only 12 unpaid parking violations, and most of them were by a single criminal mastermind from Finland. Chad and Bangladesh, regularly at the top of corruption tables, produced more than 2,500 violations between them. Perhaps poor countries are poor because they are full of corrupt people, after all.

Chinese government announces safety review after high speed rail crash

Filed under: Bureaucracy, China, Media, Technology — Tags: , , , , — Nicholas @ 09:01

In the wake of the deadly collision between two high speed trains, China announced a safety review of the high speed railway system:

Mr Sheng said railway officials would be deployed at frontline rail operations across the country to overhaul maintenance standards and checks on power connections to pre-empt outages.

All local railway bureaux were to draw lessons from the accident, a statement on the railways department website said.

Public fury and scepticism have been expressed in China’s blogosphere, both about the death toll of 39 people — suggesting it is too low — and the safety of China’s rail network.

State newspapers have also expressed concern. The Global Times ran a headline: Anger mounts at lack of answers.

“As the world is experiencing globalisation and integration, why can’t China provide the same safety to its people?” an editorial read.

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