China Frets: Innovators Stymied Here(online.wsj.com)
online.wsj.com
China Frets: Innovators Stymied Here
http://online.wsj.com/article/SB10001424052970203476804576617251769164740.html?mod=rss_about_china
6 comments
Thanks, for posting that. I've never really like Krugman all that much, but he successfully put to paper, what my intuition has always told me about China's rapid growth. Even more remarkable considering he wasn't really talking about China, and it was written 2 decades ago.
Paul Krugman, in the 90s, was brilliant. Unfortunately, I think realized that greater fame, influence, and wealth comes from partisan hackery. He still has important thoughts to share, but his signal/noise ratio has degraded.
Is there even a single piece of his you can cite in support of this? Seems mindless to attack the man as a partisan hack considering he is one of the more critical voices attacking the Obama administration for its lack of fiscal policy and ongoing banking bailouts.
Econ 101: an economy based on infrastructure growth is not sustainable. China has problems ahead without change.
Asians are slowly realizing that culture of conformity is not going to work anymore.
Think the authoritarian government system deserves a bigger portion of the blame. When you don't have freedom of speech, it tends to kill creativity.
They are? That's why they are the ones holding all the money while the "non-conformers" drown in debt.
Non conformers are drowning in debt because instead of letting your financial system iron out its efficiencies; your governments have chosen to artificially inject stimulus which did nothing to help the situation.
Asian did not face this crisis because money and power is accumulated in the hands of few and they can actually withstand any financial meltdown because they are not answerable to any one.
http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-...
Do you think in western economy any company or government can afford to do this?
Asian did not face this crisis because money and power is accumulated in the hands of few and they can actually withstand any financial meltdown because they are not answerable to any one.
http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-...
Do you think in western economy any company or government can afford to do this?
No, they're drowning in debt issues too. Google "China debt" and you'll get an earful, one example: http://www.thedailybeast.com/articles/2011/08/23/why-china-s... If you don't like that one pick your own.
Nobody got out of the last decade unscathed, China just covered it up better. Nobody's getting out of this one unscathed, either.
Nobody got out of the last decade unscathed, China just covered it up better. Nobody's getting out of this one unscathed, either.
I'm not saying they don't have debt, but they have consistently posted positive growth throughout the financial crisis, whilst maintaining a GDP debt percentage of < 20%. U.S has been in recession, and it's debt percentage is > 60%...
Sensationalist news articles that quote unknown economic groups are hardly a 'source of truth'. I'll stick with the officially reported numbers (from the IMF[1]) until someone successfully proves they are false.
[1] http://en.wikipedia.org/wiki/List_of_sovereign_states_by_pub...
Sensationalist news articles that quote unknown economic groups are hardly a 'source of truth'. I'll stick with the officially reported numbers (from the IMF[1]) until someone successfully proves they are false.
[1] http://en.wikipedia.org/wiki/List_of_sovereign_states_by_pub...
The key word in your reply is "posted". The evidence that China is lying through their teeth isn't exactly hard to come by. I'll believe they're a shining economic star whose brilliant management of the debt crisis has allowed them to escape unscathed if they can survive the next three or four years without a major crisis, caused by dodgy numbers, poor lending practices, and amazingly bad mismanagement of resources, the evidence of which is staring anybody in the face who isn't so besotted by an ideology in which China must be better than the US that they have been rendered incapable of seeing it.
Ah, how we fail to learn from history. It isn't as if we don't have decades of experience pointing out how "Communist government" and "gamed economic numbers" go together like chocolate and peanut butter. Remember how the USSR was a raging economic lion that was going to "bury us" through their amazingly productive economic practices and we were doomed, doomed, doomed before their mighty centralized economic might, until it was revealed that they were basically a third-world country with nukes and a credulous Western cheerleading squad? Maybe not, maybe you're too young, but I'd suggest spending some time with that chunk of history. It has a lot to say about China today. Way more than the credulous cheerleading squad would like to admit.
Ah, how we fail to learn from history. It isn't as if we don't have decades of experience pointing out how "Communist government" and "gamed economic numbers" go together like chocolate and peanut butter. Remember how the USSR was a raging economic lion that was going to "bury us" through their amazingly productive economic practices and we were doomed, doomed, doomed before their mighty centralized economic might, until it was revealed that they were basically a third-world country with nukes and a credulous Western cheerleading squad? Maybe not, maybe you're too young, but I'd suggest spending some time with that chunk of history. It has a lot to say about China today. Way more than the credulous cheerleading squad would like to admit.
That has little to do with creativity, and more to do with frugality.
I never said it did, but why would they "realise it isn't going to work"... when it has up until now?
If you read the article, there are people in Asia that have realized this already. If not already, they will eventually when they keep asking the Steve Jobs question.
As someone who is very conflicted about the IP laws in the US, it is interesting how many of the comments focus on the problems no IP protection causes.
Well there's subtle but important differences between patents in general, and patents as they have been abused regarding software.
There's also copyright and trade secrets. Namely, if someone swipes your code here in the US, and you can prove it, it's considered pretty trivial to bring them to court. This apparently not the case in China.
My take on software patents is that they aren't analogous to real-world engineering patents, for, say, a BMW engine. The analogy from BMW engine patents to software is more like copyright on the code itself. Software patents as they are now seem more like business process patents.
There's also copyright and trade secrets. Namely, if someone swipes your code here in the US, and you can prove it, it's considered pretty trivial to bring them to court. This apparently not the case in China.
My take on software patents is that they aren't analogous to real-world engineering patents, for, say, a BMW engine. The analogy from BMW engine patents to software is more like copyright on the code itself. Software patents as they are now seem more like business process patents.
Spot-on. In the general case, patents do appear to serve their purpose in the US. It is not a perfect system, (see: software patents) but it is without a doubt superior to a total lack of IP protection.
How is it without a doubt superior? There are cases where innovation only takes off after the patent has expired. We don't know what the world would look like without IP protection, it may be better it may be worse but we just don't know.
The greatest innovator (IMO) of China is Jack Ma from Alibaba Group en.wikipedia.org/wiki/Jack_Ma
I would hope that no one here needs a link to Jack Ma.
As an added contribution, there is a well reasoned theory that Alibaba will use Yahoo as a platform to destroy Ebay: http://ebaystrategies.blogs.com/ebay_strategies/2011/10/coul...
As an added contribution, there is a well reasoned theory that Alibaba will use Yahoo as a platform to destroy Ebay: http://ebaystrategies.blogs.com/ebay_strategies/2011/10/coul...
This article doesn't even mention Wang Chuanfu (王传福)?
Owner/Founder of BYD which is a pioneer in battery technology, expanding into cars and electronics, it's is not too disimilar from Apple (in a business sense, different industry).
Owner/Founder of BYD which is a pioneer in battery technology, expanding into cars and electronics, it's is not too disimilar from Apple (in a business sense, different industry).
This is certainly true, but innovators are stymied in good old California as well. Try tackling a serious problem, such as finance, and you'll find that your innovation breaks a recently passed law. That won't stop someone in Shanghai from copying your work, though.
http://www.1jton.com = http://www.facecash.com
So who's innovating now?
http://www.1jton.com = http://www.facecash.com
So who's innovating now?
An iron-clad law of the internet: if you complain about how X sucks in country Y, you'll inevitably just wind up with a thread full of comments about how X sucks in the USA.
That so needs to be one of the 'rules of the internet' (if it isn't already)
http://knowyourmeme.com/memes/rules-of-the-internet#.TpJshTn...
http://knowyourmeme.com/memes/rules-of-the-internet#.TpJshTn...
And it isn't just IT. Isn't it illegal in California and New York to use services like 23andMe because of state laws mandating that DNA tests can only be performed by "doctor's order"? If I, in New York, want to mail my DNA to 23andMe legally, I must cross the Hudson to New Jersey and mail from a post office there. The law will always be far behind what innovation demands.
This is a simplistic view. The law -- which requires payment processors to have some large sum of money, $500k I think, in the bank -- doesn't prevent innovation. There are still plenty of innovators in the payments space. What you don't have is a space frothing with activity and losing the public's money in fly-by-night schemes run by college sophomores. This sort of thing is what the law aims to prevent.
It's not anywhere close to the situation in China.
Serious problems are being challenged here in CA and in the US at large. I'm sorry you decided to shut down your startup in CA to protest the law. However, it is not the situation that the entire startup scene is defunct, or that we're hurtling headlong into an authoritarian regime a la China.
It's not anywhere close to the situation in China.
Serious problems are being challenged here in CA and in the US at large. I'm sorry you decided to shut down your startup in CA to protest the law. However, it is not the situation that the entire startup scene is defunct, or that we're hurtling headlong into an authoritarian regime a la China.
Logical fallacy. The fact that some payment processors still exist does not overcome the prima facie fact that at least one startup (and probably more than one) was put out of business by this law.
Thus, if you agree that startups are engines of innovation, innovation was prevented.
If you support a regulation you must be intellectually honest enough to acknowledge its empirical costs in addition to claiming its theoretical benefits.
Thus, if you agree that startups are engines of innovation, innovation was prevented.
If you support a regulation you must be intellectually honest enough to acknowledge its empirical costs in addition to claiming its theoretical benefits.
Not quite. Yours is a simplistic interpretation of a complex problem.
The problem is that the large sum of money is not $500K, which is the amount written in the statute, or $500K "in the bank," which is different from $500K in net assets. It's some other much higher number that isn't in writing and is completely up to a single bureaucrat's discretion. (See http://www.americanbanker.com/issues/176_126/think-computer-.... "A department spokeswoman says the actual amount needed is 'more than $1 million.'" I was told in person that the number is between $1 million and $80 million.) Even the Senior Counsel for the California DFI admitted that this dynamic reminded him of an authoritarian regime--but he's powerless to change it.
I didn't "decide" to shut down my startup to protest a law. The law shut down the startup.
Corruption in the United States looks different than it does in other countries. In other countries bribes are overt and expected. In the United States bribes are written into the law to serve an upper class that prices legal services out of most people's reach.
The problem is that the large sum of money is not $500K, which is the amount written in the statute, or $500K "in the bank," which is different from $500K in net assets. It's some other much higher number that isn't in writing and is completely up to a single bureaucrat's discretion. (See http://www.americanbanker.com/issues/176_126/think-computer-.... "A department spokeswoman says the actual amount needed is 'more than $1 million.'" I was told in person that the number is between $1 million and $80 million.) Even the Senior Counsel for the California DFI admitted that this dynamic reminded him of an authoritarian regime--but he's powerless to change it.
I didn't "decide" to shut down my startup to protest a law. The law shut down the startup.
Corruption in the United States looks different than it does in other countries. In other countries bribes are overt and expected. In the United States bribes are written into the law to serve an upper class that prices legal services out of most people's reach.
I also have researched requirements for becoming a licensed money transmitter, while considering starting a payments solution. From looking over your website and your company's topic in Quora, you are clearly more educated in this than I am.
However, from what I know, I believe that you are mischaracterizing the law. Perhaps this is because you feel that you have been victimized by a bureaucratic process. If what you say here and elsewhere is true, I think that it should have been possible to reach a solution that both satisfies the law and allows you to continue doing business.
It's very surprising that, in so many places across the web, you have been unable or unwilling to vocalize the possibility that the law has a legitimate intent. Even the language you use to describe your company's lack of presence in CA is misleading:
The California Money Transmission Act has forced this merchant to stop accepting FaceCash payments. You can still pay with other payment methods.
No. You have decided not to comply with the law because you object to its passing, to the entities you perceive to be backing the law, to its constitutionality, and to its implementation.
As evidenced by the fact that other startups do tackle the payments space, and will in the future, we can conclude that the situation has more to do with you than with the Act.
However, from what I know, I believe that you are mischaracterizing the law. Perhaps this is because you feel that you have been victimized by a bureaucratic process. If what you say here and elsewhere is true, I think that it should have been possible to reach a solution that both satisfies the law and allows you to continue doing business.
It's very surprising that, in so many places across the web, you have been unable or unwilling to vocalize the possibility that the law has a legitimate intent. Even the language you use to describe your company's lack of presence in CA is misleading:
The California Money Transmission Act has forced this merchant to stop accepting FaceCash payments. You can still pay with other payment methods.
No. You have decided not to comply with the law because you object to its passing, to the entities you perceive to be backing the law, to its constitutionality, and to its implementation.
As evidenced by the fact that other startups do tackle the payments space, and will in the future, we can conclude that the situation has more to do with you than with the Act.
You're right: I do object to the law's passing, to the entities that have been documented to be backing the law (see http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_2751-2800/ab...; the members of The Money Services Round Table are clarified at http://www.federalreserve.gov/SECRS/2006/August/20060829/R-1...), to its constitutionality, and to its implementation. That doesn't mean that I "have decided not to comply with the law," which is quite a charge to levy.
Just to compare notes, I'd like to see your list of startups that have applied for and are licensed under the California Money Transmission Act. As far as I can tell, based on the DFI's monthly summaries (see http://dfi.ca.gov/publications/summaries/), one startup (Venmo) has applied, and zero startups have licenses to date. This is now ten months after the law went into effect.
As for the law's intent, the statute claims that it's "consumer protection." I doubt anyone who claims that a money transmitter needs $1 million to $80 million of net worth and $750,000 of surety bonds in order to safely transmit $1.
Good luck with your startup. You should do some more research. Right now you sound like an apologist for multi-billion dollar financial corporations.
Just to compare notes, I'd like to see your list of startups that have applied for and are licensed under the California Money Transmission Act. As far as I can tell, based on the DFI's monthly summaries (see http://dfi.ca.gov/publications/summaries/), one startup (Venmo) has applied, and zero startups have licenses to date. This is now ten months after the law went into effect.
As for the law's intent, the statute claims that it's "consumer protection." I doubt anyone who claims that a money transmitter needs $1 million to $80 million of net worth and $750,000 of surety bonds in order to safely transmit $1.
Good luck with your startup. You should do some more research. Right now you sound like an apologist for multi-billion dollar financial corporations.
Let's be clear: the multi-billion dollar financial corporations didn't shut you down. The state did. They're the ones with the guns.
The financial corporations are the ones with the lobbyists.
Personally, I would rather be lobbied than shot.
You waive these documents around as evidence of something -- have you ever read them or did you only get to the first paragraph where member organizations were listed? They make some very good points about the public interest in regulating money transfer; do you have any rebuttals to them?
Did you see the section of the bill analysis which reads thus:
4. Opposition None received.
Why isn't your company's name there? Surely it has to be in your interest to actually register a complaint in a venue that matters?
You throw around terms like lobbying and stymied innovation so carelessly it's difficult to believe that you've actually considered these issues. Do you know that the MSRT spent so less than $20k on lobbying activities in 2009 and 2010?
The law against paid organ donation is frustrating my efforts to create an organ-matching service. It doesn't mean that innovation is stymied in the US, it means that regulation in the public interest outweighs my own interests. If you want to be taken seriously, try showing that you're familiar with the counter-argument and can rebut it point-for-point.
You should do some more research. Right now you sound like an apologist for multi-billion dollar financial corporations.
You sound like a whiny conspiracy theorist.
Did you see the section of the bill analysis which reads thus:
4. Opposition None received.
Why isn't your company's name there? Surely it has to be in your interest to actually register a complaint in a venue that matters?
You throw around terms like lobbying and stymied innovation so carelessly it's difficult to believe that you've actually considered these issues. Do you know that the MSRT spent so less than $20k on lobbying activities in 2009 and 2010?
The law against paid organ donation is frustrating my efforts to create an organ-matching service. It doesn't mean that innovation is stymied in the US, it means that regulation in the public interest outweighs my own interests. If you want to be taken seriously, try showing that you're familiar with the counter-argument and can rebut it point-for-point.
You should do some more research. Right now you sound like an apologist for multi-billion dollar financial corporations.
You sound like a whiny conspiracy theorist.
I do have rebuttals to many of them, and you can read them at http://www.thinkcomputer.com/corporate/whitepapers/heldhosta.... This law is not a good example of regulation in the public interest.
Think Computer Corporation isn't listed in the opposition column because I had no idea that there was a hearing scheduled for April 19, 2010 in Sacramento on the issue. Did you?
It's pretty sad that you can buy a law for $20K. They only spent $3,600 in Virginia.
Also, "waive" and "wave" mean different things.
Think Computer Corporation isn't listed in the opposition column because I had no idea that there was a hearing scheduled for April 19, 2010 in Sacramento on the issue. Did you?
It's pretty sad that you can buy a law for $20K. They only spent $3,600 in Virginia.
Also, "waive" and "wave" mean different things.
It's pretty sad that you can buy a law for $20K. They only spent $3,600 in Virginia.
They spent $0 on lobbying in 2007-2010: http://www.opensecrets.org/lobby/clientlbs.php?id=F21559&...
Characterizing the political process as "buying a law" doesn't do anything for your argument. It's a silly reduction. I actually think your white paper is a very thorough and serious proposal -- your message comes through very clearly and it's a good example of a professional communication.
Also, "waive" and "wave" mean different things.
Apparently you have no argument left, but thanks for spellchecking mine. You seem to be unable to distinguish legitimate criticism of the tenor and delivery of your comment from opposition. Obviously I am not opposed to loosening money transmission laws. I just think you could communicate legitimate complaints in a positive, engaging tone instead of ranting, and then becoming defensive and petty when questioned about it.
It was a while ago when I was looking into money transmission and I ultimately decided against it for other reasons.
They spent $0 on lobbying in 2007-2010: http://www.opensecrets.org/lobby/clientlbs.php?id=F21559&...
Characterizing the political process as "buying a law" doesn't do anything for your argument. It's a silly reduction. I actually think your white paper is a very thorough and serious proposal -- your message comes through very clearly and it's a good example of a professional communication.
Also, "waive" and "wave" mean different things.
Apparently you have no argument left, but thanks for spellchecking mine. You seem to be unable to distinguish legitimate criticism of the tenor and delivery of your comment from opposition. Obviously I am not opposed to loosening money transmission laws. I just think you could communicate legitimate complaints in a positive, engaging tone instead of ranting, and then becoming defensive and petty when questioned about it.
It was a while ago when I was looking into money transmission and I ultimately decided against it for other reasons.
You're completely correct. Just getting a business license in China takes a bribe and months of red stamping. Innovation is crushed in China mainly because of the IP laws (or ignoring thereof.)
> Just getting a business license in China takes a bribe and months of red stamping.
Do you have any evidence of this? From my time in china, I see a massive entrepreneur spirit. In fact everyone I spoke to was starting a business of some kind.
What colour stamps do you use in the U.S? Are they somehow superior to red ones?
> Innovation is crushed in China mainly because of the IP laws (or ignoring thereof.)
Any evidence of that as well? I would 'guess' that it is more related to the fact that there is so much low hanging fruit in the chinese economy right now, that innovation just isn't required to run a successful business.
Do you have any evidence of this? From my time in china, I see a massive entrepreneur spirit. In fact everyone I spoke to was starting a business of some kind.
What colour stamps do you use in the U.S? Are they somehow superior to red ones?
> Innovation is crushed in China mainly because of the IP laws (or ignoring thereof.)
Any evidence of that as well? I would 'guess' that it is more related to the fact that there is so much low hanging fruit in the chinese economy right now, that innovation just isn't required to run a successful business.
Who were you speaking to? I just recently managed to convince my (Chinese) wife that trying and failing her own online business would be better than working as someone's slave in an industry she doesn't even like. And our friends here are too busy trying to live on the small monthly salaries they get to even consider taking a risk with a startup.
...let alone the fact if you have a successful internet startup, someone with more resources will make a carbon copy of it and there's not much you can do to shut it down.
...let alone the fact if you have a successful internet startup, someone with more resources will make a carbon copy of it and there's not much you can do to shut it down.
... are you seriously positing it is "too hard" to start a business in China (the fastest growing economy in the world)?
> let alone the fact if you have a successful internet startup, someone with more resources will make a carbon copy of it and there's not much you can do to shut it down.
Because that never happens in the U.S? I can think of a number of examples just off the top of my head. But I'm worried I'm confusing your point.
> let alone the fact if you have a successful internet startup, someone with more resources will make a carbon copy of it and there's not much you can do to shut it down.
Because that never happens in the U.S? I can think of a number of examples just off the top of my head. But I'm worried I'm confusing your point.
http://media.ft.com/cms/b8268ffe-7572-11db-aea1-0000779e2340...