War on the Internet: China’s Censorship on New York Times’s Expose on Chinese Leader’s Wealth Fails

The New York Times published an expose on the Chinese leadership which had been met by swift response and censorship by Chinese authorities.

Nonetheless, the article continues to generate readership within China via the informal or shadow internet economy.

From the New York Times (bold mine)

A spokesman for China’s Foreign Ministry on Friday criticized a decision by The New York Times to publish a lengthy investigation into assets accumulated by the family of Prime Minister Wen Jiabao, saying that the article “smears China and has ulterior motives.”

Speaking at a regularly scheduled daily briefing in Beijing, the spokesman, Hong Lei, also said that the Chinese government’s decision to immediately block access to the English- and Chinese-language Web sites of The Times on Friday morning was taken “in accordance with laws and rules.”

China’s censors also moved with unusual swiftness on Friday to delete any social media postings alluding even tangentially to the article, which cited publicly available corporate documents in reporting that Mr. Wen’s family has controlled assets worth at least $2.7 billion.

Sina Weibo, a very popular microblogging service similar to Twitter and traded on the Nasdaq in New York, on Friday morning immediately deleted the unofficial account that had been used to promote the culture and arts coverage on the Chinese-language site of The Times and that had nearly 60,000 followers. The site’s official account had been blocked since the site began operations in late June.

Even the term “$2.7 billion” was blocked on Friday on Weibo. But users were still discussing the article by using deliberate mistakes like “2.7b.”

Despite the censorship, there were signs that the article was attracting attention. According to the company’s statistics, the number of page views and unique users of the Chinese-language site fell by only a third on Friday compared with the previous Friday, even though 85 percent of users are typically located in mainland China.

The investigative article was the site’s most popular, drawing nearly a third of page views, while the home page drew another third.

The continued strength of traffic to the site was a sign that many users were using virtual private networks, or V.P.N.’s, to effectively bypass servers in China and circumvent the country’s censors.

The controversial article can be seen here

Earlier, Bloomberg had been banned for a similar expose focused on another political leader

This serves as more proof that China’s largely statist regime or her practice of state capitalism, where nearly half of the enterprises remain state owned, have been tainted with favoritism, nepotism, corruption, cronyism and all sorts of economic windfall derived from the privileges of wielding political power.

And this is why policies in China have remained predisposed to Keynesianism despite its record of mounting failures and of the explosive growth of private enterprises. The latter of which has grown into a political force enough to challenge the status quo 

This also debunks the myth of selfless or virtuous leaders. Politicization of economic opportunities universally leads to immoral actions or conflicts of interests.

And importantly, the failure to censor the article in the entirety also exhibits the shadow internet economy thrives in China, which serves as further proof that internet remains a free market despite frenetic efforts of governments to control or regulate flow of information in order to protect the status quo.

Forces of decentralization (Information age or the Third Wave) have been gnawing at the foundations of the 20th century designed political establishment.

Chart of the Day: More Economic Freedom, Lesser Corruption

This striking chart from the Economist exhibits a tight correlation between economic freedom and corruption perceptions which illustrates a very important message: MORE economic freedom translates to LESSER Corruption.

The trend of  democratization of economic opportunities through lesser interventionism or reduced politicization of the markets has been mostly influenced by the snowballing forces of decentralization through globalization and information and technology driven information-digital age than through an implied dynamic of having more socially and economically “conscientious” autocracies.  

A large number of the “Most improved” in Doing Business rankings according to the World Bank (also from the same Economist article) have also been the most dynamic countries in terms of information and technology  development based on the data from the International Telecommunications Union.

Free Online Education: 100k Signs Up for Harvard’s Offer; Minnesota’s Aborted Ban

One of the top universities of the world, Harvard University, has joined the bandwagon in offering free online education.

From Boston.com 

About 100,000 students have signed up for Harvard University’s first free online courses — computer science and an adaptation of the Harvard School of Public Health’s classes in epidemiology and biostatics. The online courses, part of a joint venture called edX, begin Monday, according to Harvard.

The university’s provost, Alan Garber, said Friday that the free courses are part of an effort to educate people worldwide and that the effort will help improve education on Harvard’s own campus.

“We really think that the first courses we offer will be great, but long term, the payoff is going to come from a better understanding about how people learn,” Garber said.

Harvard and the Massachusetts Institute of Technology established edX, a nonprofit organization, in the spring, and the University of California Berkeley joined the effort over the summer.

Courses offered through edX are branded MITx, HarvardX, and BerkeleyX. Anant Agarwal, president of edX, said interest has been equally high for the courses offered by all three schools: 155,000 students registered for a course in circuits and electronics that MIT offered through edX in the spring.

Students taking the online courses hail from around the world, but Agarwal said most of those in the spring course were in the United States, India, Britain, and Colombia.

Students can take as many courses as they wish through edX, and when they demonstrate mastery of a course they can receive a certificate of completion.

Graduates of online courses will eventually challenge those of the traditional courses on the job markets. And this will ultimately pop the current education bubble and radically alter current classroom based paradigms—which have been designed from 20^th century—as well as reduce  state indoctrination, diminish the welfare state, promote competition and lay emphasis on individualization/personalization of education (one teacher per student), expand knowledge specialization and democratize knowledge--yes, education for all willing to be educated. 

Free online education, thus, represents the diffusion and acceleration of the great F. A. Hayek’s knowledge revolution.   

The knowledge revolution will undermine justifications for government interference traditionally channeled through the politicization of the "poor" and "uneducated".

Meanwhile on a related field, politicians who pretentiously claim that they are for “education for all”, and the quack “education is a right” has shown their true colors by an attempted ban on free online education for specious reasons: legal technicalities or the enforcement of a state law that requires authorization from the state government

Notes the conservative Heritage Foundation

Lifelong learners, students wanting supplemental courses, professionals, and Americans across the country interested in enrolling in physics, history, music, and a variety of other courses can do so for free from the open-source provider Coursera. But Minnesota has just informed its residents that they are now prohibited by law from furthering their own education for free through courses offered on Coursera by the likes of Stanford, Duke, Princeton, and more than a dozen other universities.

As several reports have noted, the Chronicle of Higher Education first reported the following:

Notice for Minnesota Users:

Coursera has been informed by the Minnesota Office of Higher Education that under Minnesota Statutes (136A.61 to 136A.71), a university cannot offer online courses to Minnesota residents unless the university has received authorization from the State of Minnesota to do so. If you are a resident of Minnesota, you agree that either (1) you will not take courses on Coursera, or (2) for each class that you take, the majority of work you do for the class will be done from outside the State of Minnesota.

While students who enroll in a Coursera class cannot get college credit (although they can request that a professor send an email to a prospective employer, for instance, confirming that they took the course and reporting their success), models like Coursera are beginning to change the way Americans think about higher education and provide a huge opportunity to reduce costs and improve access.

Coursera—and others such as EdX (a Harvard/MIT online collaboration), Udacity, and Udemy—represent a shift in higher education toward credentialing content knowledge. Such a shift lays the groundwork for a revolution in higher education, allowing students to attain various credentials by demonstrating content and knowledge mastery from a variety of course providers. But that (literally) free pursuit of knowledge for their own personal edification or skill attainment is no longer available to Minnesota residents.

Politicians have obviously been feeling the heat from the internet whom threatens their longstanding privileges.

Cato’s Andrew Coulson wry but relevant commentary on the ban,

One of the classes you can take at Coursera is “Principles of Macroeconomics.” Maybe the folks who lobbied for and enacted the state’s education regulations are afraid that free learning and economic literacy would threaten their phony-baloney jobs. 

Fortunately, the snowballing forces of decentralization which has been enabled and substantially facilitated and buttressed by the internet has forced the Minnesota government to backtrack.

More signs of the deepening of the information-digital age

Video: Global Entrepreneurship Week

The Kauffman Foundation of Entrepreneurship celebrates the "Global Entrepreneurship Week" with the following sketchbook video (unleashingideas.org)

Notable quote from Jonathan Ortmans:

Entrepreneurs might be the force for change in the country, to think beyond just economic change that they can actually make the world a better place.

Globalization of start up communities actually gives the world a much better chance at solving intractable challenges of the decades past…

The world needs more entrepreneurs

The capitalists-entrepreneurs represent as the sine qua non forces of progress of any society 

As the great Professor Ludwig von Mises wrote, 

The economic foundation of this bourgeois system is the market economy in which the consumer is sovereign. The consumer, i.e., everybody, determines by his buying or abstention from buying what should be produced, in what quantity and of what quality. The businessmen are forced by the instrumentality of profit and loss to obey the orders of the consumers. Only those enterprises can flourish that supply in the best possible and cheapest way those commodities and services which the buyers are most anxious to acquire. Those who fail to satisfy the public suffer losses and are finally forced to go out of business.

Unfortunately, the capitalists-entrepreneurs whom are the genuine heroes, has largely unappreciated by the politically brainwashed public, whom have been oriented or trained to see politics as saviors.  

Yet the deepening of the information age may change this, that's because this era will usher in the political economy of entrepreneurship.

Make Way for 3D Printed Guitars

3D Printing has indeed been revolutionary. Many products today are being 3D "printed" such as guns and jaw replacements

Add to that list acoustic and electric guitars

Image from Businessweek/Bloomberg

From Businessweek/Bloomberg,

Scott Summit does unusual things on his vacations. For instance, he just spent a week up in the mountains, taking in the majestic scenery and all that, but also sitting at his laptop creating a 3D model of his ideal guitar. Then he sent the computer design to 3D Systems (DDD), which used its massive 3D printers to transform the graphic model into an actual acoustic instrument that Summit can play.

As far as anyone seems to know, this is the first 3D-printed acoustic guitar on the planet, and it raises all kinds musical possibilities. (As several readers noted, people have already made 3D printed electric guitars.)

As a kid, Summit pined after fancy guitars. “I wanted a $3,000 one like Jerry Garcia would play,” he says. At the time, Summit didn’t have the money, so he spent around $100 on wood and other parts and fashioned his own guitar. “It sounded like crap,” he says.

These days, Summit spends most of his time designing custom body parts and stylish prosthetics that get built from 3D printers. He is, in fact, one of the world’s leading 3D printing and design experts, and he decided to put those skills to use over a holiday, refining his childhood vision.

Yet the difference in quality seems to be negligible…

Since the acoustic guitar would be made from fused plastic, Summit figured it would have some serious shortcomings. If it actually worked, it would probably sound worse than his old $100 model. But chances were the guitar would break under the 200 pounds of string pressure that comes with tightening the strings via a tuning machine. Summit set up a video camera to record what would happen when the stringing process started. “I thought it would at least be cool if the guitar exploded,” he says.

But, no. It worked, and it sounds pretty good. “It’s rich and full and has a great tonal range,” says Summit, who’s been known to play at friends’ weddings and at dive bars.

3D made guitars signifies as a breakthrough with more innovations and product transformations ahead

Summit describes this version as a rough draft. He wants to start experimenting with more radical designs to see how they change the sound. Somewhere down the road he figures people will be able to use software to pick out what sort of treble, bass, or sustain they desire and then print a guitar to match those qualities. “It will arrive in the mail and sound just the way you wanted,” he says.

3D printing will alter the division of labor, production process, investment flows, increase specialization and will likely become a household necessity. Eventually too, 3D printing will become object of politicization from mostly the neo-luddites or even from socialists clothed with environmentalist rhetoric.

US States: High Debts and Labor Unionism

Some debt crisis stricken US states could be facing debt downgrades soon.

From Businessweek/Bloomberg,

The debt of 30 California cities, including Oakland, Fresno and Sacramento, has been placed under review for downgrades because of economic pressures in the state, Moody’s Investors Service said.

The examinations may affect $14.3 billion in lease-backed and general-obligation debt issued by the municipalities, the New York-based company said yesterday in a statement.

“California cities operate under more rigid revenue- raising constraints than cities in many other parts of the country,” Eric Hoffmann, who heads Moody’s California local government ratings team, said in a statement. “Combined with steeply rising costs, these constraints mean that these cities will likely recover more slowly than their peers nationally, even if the state’s economic recovery tracks the nation’s.”

Communities in California have struggled to stay afloat by cutting staff and services to make up for a drop in sales and property tax revenue in the wake of the recession. Stockton, San Bernardino and Mammoth Lakes have gone into bankruptcy court since June.

Moody’s said it identified the credits as part of a broader review started in August of 95 rated cities in California.

The general-obligation bond ratings of Los Angeles, now Aa3, fourth-highest,and San Francisco, Aa2, third-highest, are on review for upgrades, Moody’s said.

Such developments merely reminds us that the US remains highly fragile to lingering debt problems.

Also, the prospective downgrades reminds me of an article that I recently came across which associates high levels of debt with high levels of ‘forced’ unionization.

From DScoundrels.com (hat tip Charleston Voice)

After discovering that the Top 10 states with the highest tax rates were all Forced Union states, it comes as no surprise that the top states with the worst debt trouble are also Forced Union states. Back in January Forbes tallied up several factors to identify which states were in the worst debt trouble (50 being the worst). The ‘Debt Per Capita and Unfunded Pensions Per Capita’ number is how much is owed per person in the state. Forbes looked at the following:

The metrics we looked at for each state included unfunded pension liabilities, changes in tax revenue, credit agency ratings, debt as a percentage of Gross State Product, debt per capita, growth expectations for employment and the state economy, net migrations and a moocher ratio that compares government employees, pension burdens and Medicaid enrollees to private-sector employment.

Forced Union vs Right-to-Work States:

Of the top 15 states with the worst debt troubles every one listed is a Forced Union state other than Mississippi and Louisiana. These states are outliers because they have assumed larger debt due to rebuilding after the devastation of Hurricane Katrina. Of the top 15 states with the least debt troubles, all but 4 (New Hampshire, Montana, Colorado and Indiana) are Right-to-Work states. Note that in 2005 Governor Daniels of Indiana revokedthe collective bargaining rights of public sector unions.  It is also notable that the Forced Union states have a higher percentage of unionized government workers than the Right-to-Work states.

Read the rest here.

Due to the mass production and centralized organization structure which characterized the industrial age, labor unions used to represent highly influential vested groups. 

Chart from the conservative Heritage Foundation 

They still are politically influential but a lot less than what had been.

Proof of this is that some of President Obama’s policies have been conspicuously pro-union e.g. auto bailouts.

However due to globalization and the deepening of the information age, labor union trends have been on a decline worldwide.

Governments in the past has implemented inflationism to pacify US labor union groups.

As the great Ludwig von Mises narrated,

The very essence of the interventionist politicians' wisdom is to raise the price of labor either by government decree or by violent action on the part of labor unions. To raise wage rates above the height at which the unhampered market would determine them is considered a postulate of the eternal laws of morality as well as indispensable from the economic point of view. Whoever dares to challenge this ethical and economic dogma is scorned both as depraved and ignorant. Many of our contemporaries look upon people who are foolhardy enough "to cross a picket line" as primitive tribesmen looked upon those who violated the precepts of taboo conceptions. Millions are jubilant if such scabs receive their well-deserved punishment from the hands of the strikers while the police, the public attorneys, and the penal courts preserve a lofty neutrality…

Firmly committed to the principles of interventionism, governments try to check this undesired result of their interference by resorting to those measures which are nowadays called full-employment policy: unemployment doles, arbitration of labor disputes, public works by means of lavish public spending, inflation, and credit expansion. All these remedies are worse than the evil they are designed to remove.

I believe that a lot of the advocates for the mercantilist-inflationists dogma are those bearing a nostalgia for big labor union days.

Unfortunately for them, today’s political priorities have shifted. Governments, along with their central banks, have been supporting mostly the crony banking system (through asset prices) whom has served as key financier to welfare-warfare based political institutions.

Worse, the era of labor union, welfare-warfare and big government are being seriously challenged by growing forces of decentralization and by internal atrophy from unsustainable government spending-debt dynamics.

The Information Age and the Philippine Cybercrime Law

Amidst fiery protest by many Philippine cyberspace users, the newly enacted Cybercrime Prevention Act of 2012 RA 10175 took effect today (BBC). 

So far, according to Freedom House in 2012 the Philippines ranks 6th in the world in internet freedom.

I am pretty sure that the law will diminish the current state of internet freedom, regardless of the excuses given by politicians, and regardless of the relative standings of internet freedom in the world overtime. Although I expect some of the current activities to shift to the informal cyberspace.

Just read all the clauses containing the term “misleading” as punishable by law to understand the law’s arbitrariness. This simply means legalistic vagueness could be used to harass political opposition or anyone on the whims of the politicos.

As of this writing the government website hosting RA 10175 is down. This could be because of heavy traffic or could be down due to protest activities undertaken by hacktivists (Examiner)

As a side note, I am also quite delighted to see the passionate responses even by statists against internet censorship. It’s a bizarre world though, when curtailment of freedom involves them, the statists balk, resist and join the commotion, but when curtailment is applied only to others they cheer.

Nevertheless, here are the top 10 Countries who censor the internet most.

From 24/7 Wall Street based on Freedom House's ranking of internet freedom

1. Iran

2. Cuba

3. China

4. Syria

5. Uzbekistan

6. Ethiopia

7. Myanmar

8. Vietnam

9. Bahrain

10. Saudi Arabia

The next list is from the Committee to Protect Journalists 

The growing crusade by governments against the internet or internet censorship should be expected and constitutes resistance to change as forces of decentralization (internet) and centralization (governments) have been on a head-on collision course.

This essentially represents part of the volatile and turbulent transition process towards the deepening of the information age.

The lists of the 10 countries who apply internet censorship most reveals that despite governments’ acts to suppress free expression, the freedom of internet expression still thrives, albeit underground.

To give some examples

-China’s shadow or informal social media users continue to swell despite the government’s prohibition.

-Cuba’s repressive government has repeatedly failed to stop domestic political activist blogger who became an international sensation Yoani Maria Sánchez Cordero.

-There is the ongoing harassment against Wikileaks through  founder Julian Assange and the war against eponymous group Anonymous (who ironically appears to have taken up the cudgels of domestic cyber activists) for exposing on government malfeasances.

-Also the Iranian government’s attempt to convert her cyberspace into a national intranet has dramatically backfired where Iran’s government has been forced to retreat.

From Gizmodo,

After seriously flipping out, cutting of Iranian access to Google and basically herding all its citizens into a tiny little government-approved intra-net pen, the Iranian government has softened its Internet ban just a little bit and restored access to Gmail.

Though the outcry against censoring the Internet at large was loud, the backlash against cutting users off from Google services such as Gmail was particularly strong. Many Iranians (reportedly around half) resorted to using VPNs to get outside of the the intra-net bubble, creating millions of dollars in profit for local VPN firms. Even government officials railed against the lack of Gmail, and complained that local clients just weren't up to snuff.

Given that the penetration rate of internet users in the Philippines is nearly at 30% of the population (internetworldstats.com), from which the bulk comes from the elite and the middle class, it would not be surprising if a sustained uproar would end up with a political ‘compromise’ ala Iran.

Bottom line: Global governments including the Philippines will continue to do everything to try to control and regulate the flow of information in order to preserve the status quo. However and unfortunately for them, the free market in the internet, people’s newfound fondness with connectivity and the knowledge revolution will give them quite a challenge.

Yet there is no stopping the march towards the information age.

War on Internet: Despite Ban, Social Media Users in China Booms; Philippine Hackers Protests

As I have been pointing out, the information age, which essentially represents the snowballing forces of decentralization, particularly globalization and rapid technological advances, will dramatically change every aspect of our lives.

And governments operating from the political economic constructs of the 20th century, particularly the centralized top-down industrial age era political institutions has been fighting tooth and nail against such revolutionary changes that undermines the privileges of the incumbent the political class and their cronies.

Today’s centralization’s debt and welfare crisis have been in fact symptoms of the decadent top-down political institutions. Inflationism has thus been one of the measures of financial repressions that has been applied to achieve such an end.

Yet desperate attempts to preserve the status quo in favor of the current beneficiaries through more social controls has only transformed the internet into a major battlefront

Today’s war on the internet through serial attempts at censorship has apparently seen a backlash from civil society, whom has been waging a broad front online guerilla warfare.

Proof?

In China, banned social media websites continue to blossom.

From Bloomberg,

Facebook Inc. (FB) and Twitter Inc. have millions of users in China despite bans on the social networking services in the world’s largest Internet market, according to the results of a survey released today.

Facebook grew to 63.5 million users in China in the second quarter of this year, up from 7.9 million two years earlier, London-based researcher GlobalWebIndex said in a blog post today. Twitter users tripled to 35.5 million from 2009.

Sites blocked in China can be accessed via so-called proxy services, which connect users to servers outside the country so they can visit sites that are filtered. The workarounds have helped Facebook and Twitter compete with local sites including microblogging service Sina Weibo, said Tom Smith, founder of GlobalWebIndex.

“It only takes a little bit of desk research to discover that what is called the Great Firewall is actually much more porous than the Chinese government would like to admit,” Smith said in the blog post.

Despite their rapid growth, the two social networks are smaller than Qzone, a website operated by Tencent Holdings Ltd. (700), with 286.3 million users. Local rival Sina Weibo had 264.1 million users. Google+, the social network created by Google Inc. (GOOG) last year, had 106.9 million users. China has 513 million Internet users, according to the government-backed China Internet Network Information Center.

GlobalWebIndex asked 2,000 Chinese Internet users earlier this year which social sites they have created an account for, and which ones they used in the past month.

The quest for free market connectivity and the Hayekian knowledge revolution has been no different in the Philippines where attempts to censor social media has led to a concerted hacker attack on Philippine government offices

From another Bloomberg article, 

Hackers attacked websites of the Philippine central bank and at least two other government agencies last night to protest a law against cyber crime set to take effect next week.

The Cybercrime Prevention Act of 2012 “effectively ends the freedom of expression in the Philippines,” according to a statement posted on the central bank website by a group that called itself Anonymous Philippines. Websites of Metropolitan Waterworks & Sewerage System, the Pilipinas Anti-Piracy Team and the American Chamber of Commerce were also defaced, the Philippine Daily Inquirer reported today.

President Benigno Aquino signed the law on Sept. 12, which identifies, prevents and punishes Internet-based crimes such as hacking, identity theft and spamming. Provisions on online libel and the authority of the Department of Justice to block websites without a court order have been opposed in several petitions filed with the Supreme Court.

The law will “infringe on the Constitutional-guaranteed freedom of speech and expression,” Senator Teofisto Guingona, a member of Aquino’s party, said in a statement today. Guingona asked the Supreme Court to declare unconstitutional several provisions of the law to take effect Oct. 3.

As I previously wrote, 

The internet essentially provides the platform for the unceasing struggle to attain civil and economic liberties, through the effective neutralization of political manipulations of the people’s minds.

The chief proponent and inspiration of nonviolent resistance and civil disobedience, the great philosopher anarchist Étienne de La Boétie once wrote,

“Obviously there is no need of fighting to overcome this single tyrant, for he is automatically defeated if the country refuses consent to its own enslavement: it is not necessary to deprive him of anything, but simply to give him nothing; there is no need that the country make an effort to do anything for itself provided it does nothing against itself. It is therefore the inhabitants themselves who permit, or, rather, bring about, their own subjection, since by ceasing to submit they would put an end to their servitude. A people enslaves itself,  cuts its own throat, when, having a choice between being vassals and being free men, it deserts its liberties and takes on the yoke, gives consent to its own misery, or, rather, apparently welcomes it. If it cost the people anything to recover its freedom

Thus enslavement and freedom is a matter of people’s choice. And the state of knowledge or ignorance by every individual in a society determines that choice.

The more the diffusion of knowledge in a society, the balance of power shifts towards individual sovereignty at the expense of political entities.

And that’s why welfare warfare based governments have been averse to the internet, and that’s why political authorities will continue to wage an all out war of control of the internet.

It seems that my predictions are on a volatile path to realization.

Will Urbanization Save China’s Capital Spending Bubble?

Mr. Stephen Roach, Chairman of Morgan Stanley Asia, writing at the Project Syndicate thinks so,

Reports of ghost cities, bridges to nowhere, and empty new airports are fueling concern among Western analysts that an unbalanced Chinese economy cannot rebound as it did in the second half of 2009. With fixed investment nearing the unprecedented threshold of 50% of GDP, they fear that another investment-led fiscal stimulus will only hasten the inevitable China-collapse scenario.

But the pessimists’ hype overlooks one of the most important drivers of China’s modernization: the greatest urbanization story the world has ever seen. In 2011, the urban share of the Chinese population surpassed 50% for the first time, reaching 51.3%, compared to less than 20% in 1980. Moreover, according to OECD projections, China’s already burgeoning urban population should expand by more than 300 million by 2030 – an increment almost equal to the current population of the United States. With rural-to-urban migration averaging 15 to 20 million people per year, today’s so-called ghost cities quickly become tomorrow’s thriving metropolitan areas.

Shanghai Pudong is the classic example of how an “empty” urban construction project in the late 1990’s quickly became a fully occupied urban center, with a population today of roughly 5.5 million. A McKinsey study estimates that by 2025 China will have more than 220 cities with populations in excess of one million, versus 125 in 2010, and that 23 mega-cities will have a population of at least five million.

China cannot afford to wait to build its new cities. Instead, investment and construction must be aligned with the future influx of urban dwellers. The “ghost city” critique misses this point entirely.

All of this is part of China’s grand plan. The producer model, which worked brilliantly for 30 years, cannot take China to the promised land of prosperity. The Chinese leadership has long known this, as Premier Wen Jiabao signaled with his famous 2007 “Four ‘Uns’” critique – warning of an “unstable, unbalanced, uncoordinated, and ultimately unsustainable” economy.

I have deep respect for Mr. Stephen Roach but I think his “urbanization” argument hardly distinguishes from the other public work projects such as infrastructure and transportation. They are all anchored on justifications of centrally planned interventions that presupposes omniscience or the superiority of knowledge of political authorities, as well as, the incontrovertibility of such trends (which for me accounts as the folly of reading past trends into the future; or “fighting the last war”).

In short, urbanization, based on government design, seems like a lipstick on a pig.

Urbanization according to Wikipedia is closely linked to modernization, industrialization, and the sociological process of rationalization.

Urbanization is characterized by, again Wikipedia.org

Cities are known to be places where money, services and wealth are centralized. Many rural inhabitants come to the city for reasons of seeking fortunes and social mobility. Businesses, which provide jobs and exchange capital are more concentrated in urban areas. Whether the source is trade or tourism, it is also through the ports or banking systems that foreign money flows into a country, commonly located in cities.

Urbanization in reality are symptoms of the 20^th century model of intertwined centralized social activities based on mass production, mass media and markets which drew development and population to urban areas that paved way for the age of urbanization.

But are we still in the industrial age or are we shifting to the information age?

While Urbanization has still been an ongoing phenomenon, signs are that current centralized trends have been shifting.

For instance in China, demographic trends show that population and development has been moving inland. This may be partly due to government projects, China’s spontaneous economic response to the unfolding events around the world and the alleged reshaping or “rebalancing” of China’s economy (The Economist)

But what mainstream seem to ignore is that mass production has been transitioning towards specialization, which is why Asia became a supply chain network.

Moreover, future trends points to home based production for simple products (3-D printing anyone?)

Chart from KPCB’s Mary Meeker

Decentralized social media via the internet has also been challenging mass media. In terms of advertising, mobile and internet have been dramatically gaining at the expense of Radio and Print. Even revenue growth from ads on TV has been stagnating.

Also, mass markets are being turned into niche or specialty markets.

Specialization of production and niche markets has led to grassroots development.

Proof?

The expansion of the booming Business Process Outsourcing has not only been within cities but to secondary cities and to rural areas as well. This applies both to India and the Philippines.

As I previously wrote,

Also business focus will increasingly be directed to specific needs (niche marketing) rather than mass production and also on where the consumers and markets are.

In the Philippines, shopping malls have sprouted not only in major cities but also in capitals of provinces or secondary cities. Take for example the largest shopping mall chain the SM Group which has 43 malls nationwide and growing. This is a noteworthy example of the deepening dispersion trends, where facilities have been mushrooming outside of mega cities.

I might add that SM has reportedly been targeting rural or provincial areas for expansion due to a booming agricultural economy and has been on a land-buying binge in Bacolod, Tacloban, Baguio, Bulacan, and Laguna, Quezon and Pangasingan.

Of course the agriculture economy has been part of the boom, but as noted above, even BPOs are headed towards rural areas. There may also be other telecommuters or home based technology businesses, aside from the large informal economy and remittance based income.

What the point?

Decentralization is bound to upend centralized based social activities of the 20th century

As the prescient Alvin Toffler wrote in Third Wave (p. 298-299)

The Third wave alters our spatial experience by dispersing rather than concentrating population. While millions of people continue to pour into urban areas in the still industrializing parts of the world, all the high technology countries are already experiencing a reversal of this flow. Tokyo, London, Zurich, Glasgow, and dozens of other major cities are all losing population while middle-sized or smaller cities are showing gains…

This redistribution of and de-concentration of population will, in due time, alter our assumption and expectations about personal as well as social space about commuting distances, about housing density and many other things.

This has gradually been happening today.

Bottom line: Urbanization will unlikely save China’s Keynesian centrally planned capital spending boom from turning into a bust.

Quote of the Day: Artificially Constructed Countries to Fall Apart

Syria – like almost all of the countries in Africa, the Middle East, and Asia – is an artificial construct put together, completely arbitrarily, by politicians in the boardrooms of Europe. In the case of Syria, it was assembled from some of the remnants of the Ottoman Empire by the Europeans after World War I. As in neighboring Lebanon and Iraq, it's got at least a dozen major religious/tribal/ethnic groups that are loyal mainly to themselves. The idea of a Syrian nation is a fantasy. It was inevitable that eventually Syria would fall apart – just as it was and is inevitable for most of the other artificially constructed countries to fall apart. This applies to the EU now as well, for similar reasons.

This is from investing guru and philosopher Doug Casey on Syria and US foreign policies.

I think such unfolding political dynamic fits the global trend towards decentralization. Yet the transition process will hardly be smooth considering that many entrenched power blocs benefit from the current order and will resist giving up on these privileges. However, change is not only inevitable but imminent.

To Fix the Culture of Secrecy, Reduce Government’s Role in Society

Internet sites as Wikileaks and Anonymous has gone on exposing much of government “secrets” through "leaks", thereby putting immense pressure on governments to become more “transparent”.

For some politicians and experts in the US, the way to deal with a “culture of leaks” translates to the management classification of information.

This from the CNN,

At the end of July, the Senate intelligence committee marked up legislation drafted in response to recent high-profile leaks of classified information. The committee's chairwoman, Dianne Feinstein, claims that the bill will address the "culture of leaks" in Washington. But the leaks are a symptom of the intelligence community's culture of secrecy -- and the bill would make that problem worse in a host of ways.

Any insider will tell you that the government classifies far too much information. Top military and national security officials estimate that between 50% and 90% of classified documents could safely be released. That adds up to a massive amount of unnecessary secrecy when one considers there were 92 million decisions to classify information in 2011 alone.

The WikiLeaks disclosures featured some vivid examples, such as a cable from an American diplomat who classified his description of a typical wedding in the province of Dagestan.

Put simply, officials who routinely see innocuous documents stamped "Secret" lose respect for the system, and that puts all secrets, the real ones as well as the purely nominal ones, at risk.

Excessive classification also means that even low-level or nonsensitive government positions often require clearances. One in every 50 American adults now has access to classified information, not a winning formula for keeping secrets.

The Senate bill, however, does nothing serious to address the problem of overclassification. Indeed, it perpetuates the fiction that all classified information poses a dire threat.

The bill strips intelligence community employees of their pensions if the Director of National Intelligence decides they leaked classified information, even if the information reveals only that Dagestani weddings last three days. It revokes the clearances of officials who disclose the existence of classified covert operations -- even if the operations, like the raid on Osama bin Laden's compound, are in the past and could not possibly be jeopardized by disclosure.

Worse, the Senate bill extends the shroud of secrecy to encompass even unclassified information. Intelligence officials already must submit any publications that discuss their work to their agencies for pre-publication review and approval; under the bill, they must submit "anticipated oral remarks" as well. On its face, the provision could require pre-publication review for dinner party conversations.

This is an example of how politics addresses symptoms rather than the disease.

In reality, the political institution called the government operates on the principle of mandated organized violence.

And much of these acts of violence and repression have been deliberately concealed from the public for reasons which works to the interests or benefits of the political authorities.

It is only when violence has been seen as popular or politically expedient, when these are made public, or when they are uncovered or exposed by media.

In short, the political nature of governments has been one of advancing the culture of secrecy or of scapegoatism. Transparency, thus, is nothing but a political jingoistic charade.

SM Oliva, formerly of the Mises Institute, has this highly relevant quote

“Transparency” is a buzzword associated with all sorts of good-government movements. But it’s something of a libertarian Trojan horse. No government can ever be transparent, for that would rob of it of its very substance. All monopoly government is predicated on the ability to actively mislead and misdirect the majority — the public — away from the truth, whether it’s political truth, economic truth, or personal truth. Even government attempts at transparency are themselves usually little more than misdirection by another name. One can be transparent in such a way as to satisfy most inquisitors while revealing nothing that compromises the basic pillars of the state.

Bottom line: Managing information classifications will hardly solve on the issue of the “culture of secrecy” the latter of which signifies on the essence of government. To attain government “transparency” extrapolates to the vast reduction or retrenchment of government’s role in society.

And another thing; the pressure by Wikileaks and by other social media outfits on governments reveals of the process of the slomo ungluing of centralized political structure. Centralized institutions have been feeling the heat from, and or have been fervently fighting against, the forces of decentralization.

Deepening Information Age: In the US, Public Education is being Undermined by the Internet

The internet seems on path to unravel 20th century welfare state institutions partly through the public education model.

Professor Gary North explains,

Parents are pulling their children out of the government schools. This is happening across the USA.

In city after city, enrollment is declining. This is not a recent development. It has been going on for a half a decade. It has taken place in half of the nation’s largest districts.

The trend looks irreversible.

As the Web offers better programs free of charge, the public schools cannot compete. The inner city schools are catastrophic. They are getting worse. As whites ans Asians flee the cities, the inner-city schools get worse.

The tax base shrinks. The teachers union demands more pay and smaller classes. The city governments are trapped. Solution: cut programs, fire teachers, and enlarge classes back to (horror!) 1959?s 33 students.

Nobody is supposed to talk about this. It is time to talk about it. Public education will not recover. The longer the decline takes place, the more parents will conclude that there is only one solution: pull their kids out.

At some point, voters will not pass any more bond issues. They will not consent to higher property taxes. They will let the public schools sink.

Read the rest here

Democratization (and the de-politicization) of education will become a global phenomenon as educational platform will mostly migrate to the internet.

One example:

Coursera a free internet educational platform that offers high quality courses from the top universities recently announced that 12 universities — including three international institutions — will be joining them particularly, the Princeton University, Stanford University, University of Michigan, and University of Pennsylvania in offering Coursera classes (Coursera Blog)

On Coursera, you will now be able to access world-class courses from:

• California Institute of Technology
• Duke University
• École Polytechnique Federale de Lausanne
• Georgia Institute of Technology
• Johns Hopkins University
• Princeton University
• Rice University
• Stanford University
• University of California, San Francisco
• University of Edinburgh
• University of Illinois at Urbana-Champaign
• University of Michigan
• University of Pennsylvania
• University of Toronto
• University of Virginia
• University of Washington

For traditional schools, it would be adapt or perish.

The salad days of the education bubble in the US or even in the Philippines have been numbered.