On why some ideas just work

If you work in a corporate environment you will know the story well – from the lowest of the low to the highest of the high – the battle to make yourself heard, and to bring about some sort of positive change. Corporates seem to embody this problematic space of calling out for good ideas and then rejecting every single one of them.

“Too radical”

“Not radical enough”

“Prove the benefits”

“Does it align to our strategy?”

Yada. Yada. The place where good ideas go to meet the masher. And oh how they get mashed. Paralysis by analysis, and a litany of half baked attempts all weighed down by agendas.

From experience – good ideas are not just one off inspirations, they are usually carefully considered based on years of experience. We’re not talking startups here, corporate environments have a terrific amount of domain specific experience floating around in them, and a lot of it is based around seeing what is wrong and having some idea of how to fix it, as much as it is the day to day. Corporates are great at jumping onto the latest trend and often rubbish at cleaning the mess from past efforts. There is a lot of junk sitting around. And that often needs cleaning. We’ll come back to this a bit later on.

So to the subject – and why some ideas just work. Making new things happen at work requires an overlap of a few key pieces:

A) The desire to change. Tech companies flock to this idea but more traditional companies are slowly getting on boards – things can be done better. Doesn’t matter what company you work for.

B) The right leadership. This is the catalyst. Put the right leader in and they will set the direction, and then allow people to make it happen. This bit cannot be overstated. Too often companies race to put the guy who looked after the money into the top slot, and that to me puts that company in a holding pattern – you wont see much appetite for taking risks. New ideas entail risk. And companies and departments who want to promote new ideas struggle to do that with staid management. To put it mildly.

C) The right preparation. Read above about cleaning up from the previous mess. A lot of great ideas get held back because the inability to implement them, either that or its a fudge from the old way to the new that ends up in a worst of both worlds, albeit with a shiny shop front, while the bits doing the work are held together with string. After a couple of iterations this becomes fairly untenable. Systems that rely on systems that rely on systems when half of them are out of date and poorly supported is a recipe for chaos. Brand new tech gets around this to some extent – one of the reasons why people like it so much. No baggage to deal with.

D) The champion. The often slightly awkward dude who has his head in the clouds, but has got the ideas right. Think Jony Ive. Often obsessive, needs to be tenacious, and needs to know B) pretty well. If he tries to go via committees he gets squashed every time. It’s often how the leaders and the champions deal with each other that makes the rest happen.

E) Budget. Good ideas don’t run on love. Sometimes massive budgets can lead to great things as you can pay for a whole bunch of D)’s to sit around and be creative, but this almost never happens. So lets just put this down as “adequate funding”. Too little money however and you might as well pack up and go home.

F) (Maybe) A lack of orthodoxy. Wrap that into D) – point is you need to be a square peg in a round hole for a lot of this stuff.

Now apply it and look at some case studies. The best and most obvious is Steve Jobs, Jony Ive and Apple. Especially then and now. Before Jobs came along Gilbert Amelio ran Apple, and Ive designed (by his own admission) terrible products. The day Jobs went down to the design lab for the first time Ive thought it was to fire him. Instead the iMac came out of it. The link between B) and D) cannot be underestimated. The interworking between those two changed the world, quite literally. Contrast that again to now and while Apple is caning it still, its easy to see its run by a bean counter and not a visionary technologist. (Sidenote: why do bean counters often end up in charge? The board. Who are themselves bean counters and in turn driven by investors who would rather keep making money than take risks, until the company starts to suck and they find another target to stick their fangs into).

Counterpoint to this is a revolutionary jet the Brits came up with in the 60’s called the TSR-2. This was almost decades ahead of anything else. It was however destroyed by bureaucracy. If the designers had been left to do their job it would have been a brilliant jet, but committee after committee got their hands on it and various parts of the design and oversight and it fell apart.

Another case in point is the Motorola RAZR – in its day it was the phone to have, and it was done as a skunkworks project on the sly with little oversight. Not saying you dont need oversight but man do you need to not be put in a straight jacket. And corporate environments are straight jackets.

Small companies seem unburdened by these problems – hence the appeal to many of startups – small groups of people able to just get on with the job, and all generally pulling in the same direction. Not always, but it’s easy to identify who’s not on the team and they get shuffled offstage.

So the idea to promote new ideas in big companies is create startup environments, skunkworks, within them having identified the right leaders and the right champions – they WILL produce results. You’ve got to trust them, create the right environment and leave them alone. And do plenty of C). Because we all need that.

And that is to me, how “some good ideas just work”.


This is going to be very short and sweet.

One thing that has struck me, as with the friends I have, the jobs I have, the life I have, is that the one true strength is being able to adapt – not relying on the idea that some things are set in stone – nothing is.

It is your ability to accept that, and adapt, to impose change where it’s needed, to respect the old but make way for the new, however uncomfortable that is – this is, was and always will be the most important of our latent abilities.

“The only way to make sense out of change is to plunge into it, move with it, and join the dance”. – Alan Watts


Negativity, and when it is not negative

I wanted a change of direction. Paradoxically I wanted to get away from the negative, and yet here I am again talking about something negative – but doing as I often do – rowing the boat out on something and showing how bad it might be before trying to explain it is nothing of the sort.

The principle of negativity, tied to the feminine in many religions and philosophies (Yin and Yang in Chinese, Kali in Indian philosophy, nowhere to be found in western religion, and runs almost 100% counter to everything we understand in the west, or at least find politically palatable) – and anyone reading this is probably groaning already, but that is the point – you are all wrong.

The “Yin” principle, that is, the negative, passive, feminine quality, is taken completely out of context, and purely by reason of cultural adaptation in the west. When we say that this is the “negative”, we need to look at what “negative” means. For it is not what you think. In the west, we equate negative with something wholly bad, where in other cultures, the negative is not taken as something bad at all, but rather another piece in what goes into making the whole. A couple of obvious examples of this are the the words on a page and stars in space. Would there be printed words if not for the page, would there be stars if there was no space to put them in – these are two fundamental complimentary pieces of the same thing, only the negative side is the substrate upon which everything else goes on top of – it is the mother, it allows for other things to exist, and viewed as such it falls back into a much more understandible role. And it is not and cannot be viewed as a bad thing, rather it is the very thing underpinning the rest of existence.

So when people (wrongly) try and talk about the eastern religion’s derogatory sense of equating negativity with the feminine, it is us that have it wrong – we have misunderstood what they say, and what is actually meant is that the feminine is the foundation upon which everything else actually sits.

As a final point – in the east as in the west, the male role has usually been thought of as the dominant one. This is not a position I support – I can understand why, but I think society could do with re-thinking this, not in a feminist way, but in a more meritocratic way – the point being that the mis-application of this principle has in some small way contributed to this problem in the past, and removing it may help provide a fresh set of eyes on the issue.

A big change of direction

There are not many who read my blog, I write about challenging subjects, and from a biased perspective. It’s time to move on from this – there’s plenty you can read from far more well informed people than myself on these subjects. Technology is my job, but its not what keeps me going. Politics is my fascination but it is inherently negative.

It is time to draw on what I see as the more fundamentally positive forces in the world, and talk about them, instead of the seething masses and all of their problems. Don’t worry, those problems are still front and center is pretty much everything I’ll write, but it has become time to write from a different perspective, one that is more encompassing, one that is better in tune with where we want to go, rather than where are.

I will have to chose every word from this point on carefully.

China. Part 3

One thing that has always pissed me off about China is that lying is institutionalised. “We will not militarise the South China Sea”, 2 years later, bang, it’s militarised. “Peaceful Rise” – like f*ck its a peaceful rise. It is based now around coercion and threats as much as trade. But the story worked until it didn’t.

So with the world now a lot more awake to the fact that China’s open declaration (Made in China 2025) means that their industries face an existential threat, the response has started in earnest. Firstly, it is the US and tariffs. The main western industrial countries all complained about the US hitting them too, or not going via the WTO, but the US has one primary target in all of this, and down the road, the US has the option of selectively targeting its tariffs – and since China has walked all over the WTO, they would have a hard time pursuing the US through any WTO remedies. The double standards shown by the WTO if they were to entertain this sort of nonsense would probably destroy it. The Chinese will try however – they have already said so:


They wont get far this time. Trump has blocked appointments to the appeals court within the WTO, meaning its ability to handle trade disputes with binding force is disappearing fast, and according to the article above, will be all but non-existent in 2019. So long WTO. Now it’s bare knuckle brawls with no referee. The Chinese national petulance will be on full display here however. They don’t like their feelings being hurt.

There’s a lot of people around the world quietly impressed by the chutzpah shown by the Chinese. Give em an inch and they will take 100 miles. Lie about basically everything and no one can tell anymore what might actually contain some thread of truth. A great example of this was Huawei in a market I used to work in. We had just swapped a bunch of old equipment out for some shiney new Huawei stuff, and lo, out of the box, with no optimisation, it was performing much better than the older gear, that had been properly tuned. Basically Huawei had lied about everything to us – the stats lied, the setup was purposfully incorrect to improve the stats (we caught them red-handed there), and our ability to monitor for ourselves was so contemptuously degraded we were forced to rely on their reporting and their engineers, and then the real cherry, when I personally challenged their figures and asked for the raw data, I was told by my side to shut it. Never once before in my professional career have I, working for a major mobile operator, been told by said operator that I am not allowed to challenge the obvious bullshit results given by a dodgy vendor. Those slimey little fuckers had it all sewn up. Challenging vendors on major installations is WHAT YOU DO. IT IS A CENTRAL PART OF YOUR JOB. Except when Huawei is the vendor it would seem. Anyway. Enough petulance of my own. Back to the story. (all the guys working with me said they thought exactly the same thing by the way…)

The mercantile approach of the Chinese is beginninng to run into serious opposition. China had been almost unopposed up until Xi came into power. I don’t think his predecessor was anywhere near as feckless as everyone suspected. “Mr Woodface” laid the groundwork for Xi to do what he’s doing now.


Anyone who can say that he presided over a country that averaged 10% growth for 10 years straight is no moron, to say he was part of a process that has kept that party rolling for 30+ years is nothing short of astounding. Then Xi comes along, and all of a sudden what was flying under the radar now appears in the headlights. “Made in China 2025” “Make China Great Again” (Yeah, he said it first…) “China Dream”, these alone started to get everyone nervous, and then you had Chinese industrial espionage and outright IP theft, not to mention forced tech transfers all hitting the headlines, well, of course it meant things were going to get tougher for the Chinese. Just this week Apple is saying it had its IP stolen by Chinese workers


Happens weekly. And the Chinese scream blue murder when they get accused of basically anything.


Would be maybe ok were it a sole case, but it is happening everywhere, constantly.


– and their denials of wrongdoing in that case were epic.


That one is just ZTE taking IP from a patent pool and then leaving just before its turn to pay. Different method, same pattern, same result.

So when you add all of this up, the picture it paints is one very fucked up mess for China. Many countries do business with it through gritted teeth. Long gone are the rosy “win-win” media statements, everyone now feels slightly stiffed by them, and its only getting worse – China isn’t backing down. Fuck no. They’ve realised they made quite a mistake with “Made in China 2025” – that put the other industrialised countries into a near panic. That annoucement along with the methods they have outlined to back national champions and heavy government subsidies are in direct contravention of WTO rules. (see the bit above where I said they about to go running to the WTO to have a cry about the US tariffs. They don’t have a lot of shame here).

I dont see the BRI going much further, I dont see any chance of Europe teaming up with China against the US, they know Trump has another 2 years and things will probably go back to normal, if they lose their industries to China, well that is generations at least, that is the calculus they work to. I do see cyber attacks quietly ramping up, I dont see AI making any major breakthroughs, and I work in that field, but I’d give China an odds on chance of leading there – simply due to the fact you need incredible amounts of data – and China has that. The quality of the research that has come out of the US far exceeds anything from China. China has a lot of thesis and patent mills that plagiarise and print garbage.

Click to access long-cheryl_quality_implications_of_patent_promotion_policies_in_china_ec2342_seminar_1-25-17.pdf

That is the Harvard University School of Economics’ take on it.

This is all quetly leading to a showdown. Xi is as big a thug as Trump, just a lot more enigmatic. He wont back down. Trump, for all of his bluster wont cut and run on this – he’s made it crystal clear what his intentions are, and with guys like Pompeo, Lighthizer and Navarro (and now Bolton as well. He is living proof that there was an an attempt to cross a walrus with a politician, that met with some twisted level of success) with his ear, he started this rumble, its too late to walk away now.

Amongst many of my friends we’ve all quietly conceded that the future ain’t looking good. How bad it gets is anyone’s guess, but China has been allowed to get away its nonsense for way too long now. It’s reckoning time.

Audi R8 – A review

My Audi R8 V10

I always thought the letter R and the number 8 went together well. When you add “v10” to it it then starts to sound a little bit silly. But there is a massive difference 2 cylinders (and 1l of engine capacity) can make. I have driven the V8 before and it looked good, sounded good, but it didn’t have the one thing you want – balls to the wall speed. It was fast in a “well I am racing a merc here” sort of a way, but to take on a real challenger and qualify for supercar status, something more was needed.

Some clever wig at Audi suggested bolting on a Lamborghini Gallardo engine, management said sure, give it a try, and the R8 V10 was born. Be in no doubt then, while its pedigree is Audi, who is known for good construction and a slight boringness, its heart is that of the raging bull – the 5.2l Gallardo engine is anything but timid. take 35hp off the stock Gallardo engine and you are still left with something near the performance of a nuclear ramjet. (Yeah ok, that engine is taken from the S8. Dont wreck my story here)

First drive. Boring. Given that I had already bought the car my heart sunk. I did buy it without taking it for a test drive – it’s a fucking Audi R8 – whats a test drive going to do?Waste of time, or so I thought. But given the first experience of driving it for real I thought – blew cash for what – an ultimately unimpressive ride that looked good. I bought the car for the experience, and that experience sucked. At low speeds you felt like you were driving a battle tank. Difficult to turn, so bad even that the universal joints popped out at full lock and I was busy revving the car with no movement back or forward. Some serious disappointment going on, but too late, it was mine, and I had to put on a brave face and show mum and dad the lemon that was mine. That’s actually kindof how I felt – capped off by the fact that I stopped traffic by not applying the brake before engaging gear. Queue honks of disapproval (and derision).

Get out of town and – Wait. One. Second. The speedo clicked over 80km. The transformation from “Heavy handed unwieldy battle tank” to “5.2 liters worth of pure fun” was pretty quick. Now. Drive from Auckland to Tauranga. Take the back roads where you know there are:

A) No cops

B) No one else

C) Tight roads

D) Speed available

I was grinning like a schoolkid. And fuck was I moving. Getting over 200 without even pushing it. I hit 230 and was still accelerating fast.

The car was suddenly transformed from a deadweight (last car was an AMG Merc which was as easy to park as a mini. This was like parking a oil freighter) into the most sure footed, heart racing, electrifying supercar I have ever driven. Jeremy Clarkson has been quoted as saying that “this is the best car I have ever driven” I have never driven another supercar. I doubt very much I will. You point and it shoots. Some of the shit that I got up to was solely as a result of the car teaching me to drive it – shooting gaps I would never have thought possible otherwise. Taking corners marked 35 at 100 (and I shit you not, I did), simply because you knew you could without any trouble. I dont know what to compare this thing to, because as I say I will probably never have the chance to buy another supercar. This is it. The only one I will ever own. But I could have done way worse. Everything about this car says that it was designed and built by people who knew exactly what they were doing. Except for making the car not feel like an embarrassment at low speed. Maybe they did that on purpose to make you go faster. Works for me. I have given a couple of my better friends a drive and the results were unanimous. Big smiles. If anything I feel relieved that I have taken some of my money out of the sharemarket and turned it into something have enjoyable. There is no joy in stocks, but there sure as hell is in possibly one of the most well engineered machines invented.

Bottom line is you only live once. Plan for the future – but if time permits, live for today.


I wrote this one a few years back. Whilst living the life of a single consultant. I am now married with kids and no car – I dont need one where I live. I have no regrets, Nothing could replace the black car as we called it. Except a daughter. And I’d take my daughter over any car, any day of the week. Looking back it was a privilege and an incredible thrill to own one, and I am in business, so maybe one day – if I have the money I would want another – even the same one back again. It was a masterpiece.


The Myth of ISIS

(Republished from 2015)

Say whatever you like about ISIS, but for most of us, nearly everyone, ISIS is little more than a bunch of guys who have taken over a desert. They manage to poke the west in the eye every so often, and the response is always the predictable assortment of bombs, rhetoric and underlying lack of coordination between parties who if they really wanted ISIS gone, they would form a coalition and go in and get rid of them.

This hasn’t happened.

ISIS need a few things to survive. They need weapons, they need to sell their oil, and its very likely they need a lot of additional funding. These all come from, or go to, places outside their area of control. That implies complicity on the part of others who either sympathise or benefit from dealing with them. None of this is any surprise. And if you take any of the above support away from ISIS, they would quickly evaporate. But easier said than done. They key element here is weapons and  ammunition – militants need plenty of these. They have to come from somewhere.

So the next step is working out who is supporting ISIS from the outside, and why. The weapons that pour into the ISIS controlled area have to come through a coordinated logistical supply network – and these are expensive and hard to maintain. And, in theory, given that the terrain that ISIS holds, and the fact that they are not on the move – should be well known. For any nation with an effective strike capability, targeting these supply lines is one of the most simple ways of weakening them. ISIS could be defeated quickly if these were severed.

So where from, and why?

If you look at the countries surrounding the Syrian desert, you have Iraq, Jordan, Syria itself, Israel, Lebanon, and Turkey.

To look at each country in turn:

Iraq – They have their own ISIS problem, so they are in a similar position to Syria when it comes to the question of where the weapons are flowing from. It has to be from a non ISIS controlled area – either the south through Iraq, which is unlikely – the supply lines run through unfriendly territory for ISIS. To the northwest along the Jordanian border however is a likely route – Saudi is a tacit supporter of ISIS and ISIS controls the road down to the border through Iraq. So yes, Iraq indirectly is one possible supply line.

Jordan – not directly, but as above, an inlet through which Saudi can import arms.

Israel – I dont think anyone seriously believes that Israel is supporting ISIS. They are interested in a contained middle east that poses no threat to them, but apart from conspiracy theories, not really much chance.

Lebanon – No chance. They are a strong supporter of Syria.

Turkey – with the shortest route to areas under direct ISIS control, and the complicity of the Turkish government, this is where the majority of the arms are coming from.


But why? Why would a NATO member support what is by all measures one of NATO’s perceived largest threats?

To start with, there is a lot of nuance in this situation – forget “Good guys” and “Bad guys” – it is more about regional claims, religion, state actors, and power. Firstly Syria – it wants to cling onto its territory. If Assad falls, there is a good case to be made that the country will disintegrate – the Kurds will claim a chunk, the Alawites, and others will go for theirs, and the country will likely remain in a state of chaos until a strong government once again gets into power. But the key thing to this is the idea of a strong government. Western style democracy in the case of Iraq has been shown to be weak in terms of governance and control – its not like different tribes want to peacefully coexist there – they are all out for settling scores – and that means continual conflict.

Turkey wants Assad gone, no matter the consequences. And this is the part where ISIS comes back in. If ISIS can be controlled – to the degree that they are effectively doing someone else’s bidding, and this is what appears to be happening, then collateral damage, as long as it is not in the sponsor’s country, is acceptable. Dont try and convince France, or Russia, or Lebanon of that, but Turkey seems to be allowing, if not abetting this.

So ISIS seems to me at least to be the weapon of choice for Turkey to pursue its ends in the middle east. Duplicitous in the extreme, myopic in its focus, but in terms of achieving a goal of keeping Syria in perpetual chaos, quite effective.

It will eventually backfire – unintended consequences usually change the form of any battle where many players have competing aims, but one side will emerge as the victor eventually there. We have no idea who. It’s like any demon – we think we can tame it, but if we keep feeding it, it will come back to bite us. It is a mirage, but given enough time and energy, could solidify and pose a real threat. Their supporters, just like the rest of us, had better be aware that if they do become a real force then they are to be feared. Currently however, they are a balloon, with messages of hate scribbled all over them, but incapable of survival without support from outside. It may change, for better or for worse, but currently they are an artificial demon, summoned in support of someone else’s cynical purpose. We run the real risk of turning them into a fighting force. Currently they live in the desert, they may not stay there.

Universe 25

Life is possibly the most tenacious idea we have ever been presented with. Forget business, love, work, just the actual idea of a continually self replicating, functional biological machines that as soon as they are born don’t need a manual on how to be themselves – you feed them and put them in the right environment and they will thrive. From humans on one end to extremophiles (biological beasts that have learned to adapt to some pretty extreme environments) on the other – life itself is characterised by the fact that it is hard wired to survive.

Except when it isn’t.

John Calhoun made a number of experiments in the 1960’s and 70’s around mice populations in controlled environments with an abundance of everything where all the natural threats to them had been removed. They ended in disaster. For the mice. Society tore itself apart. http://www.mostlyodd.com/death-by-utopia/ – You can read it for yourself – it contains links to other similarly well written articles as well. There were a couple of important conclusions that Mr Calhoun makes. The first was in mathematical form:

Mortality, bodily death = the second death
Drastic reduction of mortality
= death of the second death
= death squared
= (death)2
(Death)2 leads to dissolution of social organization
= death of the establishment
Death of the establishment leads to spiritual death
= loss of capacity to engage in behaviors essential to species survival
= the first death
(Death)2 = the first death

This formula might apply to rats and mice—but could the same happen to humankind? For Calhoun, there was little question about it. No matter how sophisticated we considered ourselves to be, once the number of individuals capable of filling roles greatly exceeded the number of roles, (attribution – this is quoting from the website)

only violence and disruption of social organization can follow. … Individuals born under these circumstances will be so out of touch with reality as to be incapable even of alienation. Their most complex behaviors will become fragmented. Acquisition, creation and utilization of ideas appropriate for life in a post-industrial cultural-conceptual-technological society will have been blocked.

Now to take a step back and apply this to the current condition for humanity as it nears the third decade in the 21st century.

There is no doubt that humanity is becoming very bottom heavy. Educated and industrial nations’ birth rates are sinking, many well below the replacement mark of 2.1 children per adult couple. The natural response to this is to bring in people from other countries. Long story short, in most cases, the population keeps rising. This is ok as long as there are jobs and stability and the required infrastructure is built and able to cope – the net effect is that the engines of growth and the tax base are happy. This reaches a plateau at some point however, after which things like social integration of foreign cultures, inter-racial tensions etc go from being something that from time to time is noticed to becoming more and more of a problem that is constantly there and needs to be dealt with.

So in this there is a direct link to the conditions (NOT outcomes) that Mr Calhoun describes – increasing population, no or limited resource problems, finite space in which to house people. Add in religion and cultural differences and after a point of continual expansion, you reach a point where no one wants any more incomers. It’s entirely an issue of perception and who to blame when things start looking as though they are taking a turn.

If you take one step back from the detail of the experiment and look at the wider picture of exactly what he did – a simulation of more or less ideal conditions for these creatures to thrive – no predators, no widespread disease, plentiful food, and the two constraints – finite space, and less obviously finite functional roles within a society, this was a combination that proved to be deadly to the survival of the species.There was no decline and stabilisation, there was at some point, the destruction of the idea, even at something of as simple a level as a rodent, of the society in which they lived. It seems that past a certain point of social disintegration that even depopulation didn’t turn the situation around – something fundamental to survival was lost, and nothing internal to the remaining population could bring it back – there was no innate sense of structure left.

Life’s natural balancers to this are conflict and disease (and predators, if you’re not at the top of the food chain) – and a sort of equilibrium can be maintained. What we have currently in the world can best be described as a major shift in equilibrium, at worst, I have no idea. Not good though. The point is, with an abundance of everything, the mouse society broke. Not just went into a balance at a lower population, but simply went out of existence – the skills the new mice needed to keep society running vanished.

Previously I had an optimistic outcome for us – that mirrored what Calhoun’s intentions for the experiments were – he set about trying to understand and design environments where the problem of lack of space could be minimised. This was originally written in 2015, when I thought there was still room for some adjustments that would have kept us away from disaster. But here we are once again, after a massive influx of migrants into Europe, who cause chaos, and one questions whether or not after a certain point the same conditions within the human system could bring about a similar fate. As time goes on and the dislocations grow larger, I think it’s very difficult to tell what will happen. But I will make two very open caveats – inequality and the disconnection of the wealthy – the growing unrest that this seems to cause could be a catalyst for breakdown – but this falls outside of the mode described above, the other is open revolution. And I’ll write about that separately.

For me the parallels between the mouse world and ours are this:

Growing dislocation – the poor having to abandon family to try and do anything to survive. Families survive better when they are together. This is working its way from the poorer classes on into the middle classes these days. In the mouse world it meant that instead of proper rearing of the young, they were kicked out at an early age and had to fend for themselves.

Fewer and fewer meaningful positions – if you look amongst any biological group, roles and responsibilities are a natural occurrence, and our society is progressively devaluing and removing these, with fewer alternatives.

Isolation. some groups, instead of partaking in society, shit themselves off in isolation – and forget how to interact with other members of society (in Calhoun’s world, he called them the “Beautiful ones”, in ours, we have various names for them, depending on where you are from. The “Hikkikomori” of Japan is one that has been examined in detail. There is no shortage of media coverage about how social anxiety is on the rise.

So – I think the parallels are there, to some degree. It’s what we are going to do about them – what we think is important to keeping our society together and acting on that, that counts long term.

Will China Crash – Part 2

I am from New Zealand, and we look at the world from about as neutral a perspective as I think is possible. Which is not to say neutral, but maybe somewhat less biased than other nations. It is when you start analysing what is going on in the world that you can quickly lose objectivity and start taking on a more judgmental approach. And certainly when you engage in debate with people from other nations, it becomes very difficult to maintain objectivity.  Nevertheless, I will state from the outset that I am trying to be as objective as possible here.

Will China crash? I know I said in part 1 that No, China wont crash, but I am starting to wonder now what the future for China is – is it overstepping the mark? Are internal tensions going to tear it up? Are the systems China operates on (Guanxi etc) compatible with the rest of the world, and how much of the news that makes it out of China (GDP Reports, basically ANY governmental report) realistic, and if not, how much can you expect that they are out by.

First up – is China overstepping the mark. There is one clear case of where the rest of the world is confronted by this question – the South China Sea, and the Island building going on there. To those who dont know some of the intricacies, here is a map of the south China sea and the claims of China (in Red), and the international 200 Nautical mile Exclusive Economic Zone that is the normal marker for territorial claims:


Basically China has claimed the entire area for itself. Why?

China’s reason: It was traditionally our waters, we have fished there since ancient times.

More likely reason: Fossil Fuel reserves, Fishing, and sea lane control.

China’s reason for the claim has been challenged, by its own records: http://www.ancient-origins.net/news-general/ancient-maps-spark-debate-between-china-and-philippines-020179

The Chinese map referenced which dates from 1169 shows that the southernmost limit to China was Hainan Island. Yet China is saying that the claim of the entire South China Sea dates from ancient times.

Whatever it is, the claim is dubious at best, and goes in direct contravention of the U.N. Convention of the law of the sea (which China has ratified) that stipulates a 200 Nautical Mile exclusive economic zone (EEZ) from the shoreline of each country. So even without the claims to rocks and features, China is blatantly in breach of this (its closest claim to the Philippine mainland is 80 Nautical miles, and is not covered by any EEZ derived from its island claims)

So – to return to the question – has China overstepped. The answer, in the perception of many other countries is clearly yes, and in a very troubling way. Troubling because it is building military bases in the South China Sea to extend what it claims to be its indisputable sovereignty in the area – and there is no easy solution – the other claimants have ever friendlier bonds with the USA (even Vietnam…), because they fear China, and the stage is slowly being set for an eventual confrontation. Not lost on these nations is Chinese incrementalism. A little bit here, a little bit there, an Island here, an ADIZ there, nothing that in itself could trigger a major response, but gradually China is getting what it wants, step by small step.

The question then becomes – what is the motivating factor behind China’s expansion, and why does China think it will prevail?

In the case of the South China Sea, I think you see the locus of Chinese thought, Chinese perceived might, and Chinese projection and protection of its mainland. Ancient fishing ground is a convenient, if not somewhat disingenuous, excuse to claim an area that can be exploited for the tremendous gain of China.

It will (and has) provoked a reaction. The USA nor her allies are going to get into a military engagement here – the long term reaction will be an economic humbling of China, and one that it cannot avoid. This will be covered off in a future post. As will the other questions above. But China has made quite a strategic blunder here – while it may gain and hold ground, it should have instead made friends. China has no real friends, except for North Korea, Laos and Cambodia. This is where it is critically weak. China has a somewhat clearly articulated policy of no alliances. My post on Great State Autism goes into this further – suffice it to say here however that this is counterproductive on any conceivable level. It is a massive country and increasingly willing to throw its weight around, maybe it thinks it doesn’t need friends, but instead of a battlefield outcome, the battle will be one of perceptions, and in this, the USA is winning comfortably against a country that is starting to show worrying signs of belligerence.

So nothing happens in isolation – while the USA isn’t dumb enough to start a fight in the area, both economically and strategically, China is being undermined both externally and by itself in ways that it cannot overcome. Some of them are demographic, some of them are based around cost-of-labour and China’s sprint to become a middle or high income country, but their dependence on foreign multinationals whom are already looking to lower cost alternatives to China (Google “PC-16 Straftor” for a clear explanation of this) has the ability to hollow China out. China is an export driven country – it is heavily dependent on exports to maintain stability. Currently China exports around 24% of their GDP per year. (The US around 13% and Germany around 45% – and Germany is in crisis – they are major creditors and when the debtor countries start winding back  on the credit – where does Germany export to? – that is another story – Google “German export problem Ambrose Evans Pritchard” – This more than anything else is the European Achilles heel). Back to China. If China withdraws credit to the US – “Calling in her debts” – China will be the one who loses – there will be immense pain, but the US already has diversified manufacturing and is quickly reducing its dependence on China as the sole source of products. If China makes conditions bad enough there that foreign companies pull back manufacturing (Microsoft, Intel and others have recently relocated to Vietnam) – China loses. The legitimacy of the CCP is predicated on delivering a slowly improving standard of living, to offset the increasingly authoritarian method of governing the country. They have made huge steps, but now they face huge challenges which they have not had to deal with before.

The South China Sea as I see it is a trap for China, and they’ve created it and walked straight into it. There is no doubt that China’s actions there have frightened and annoyed all the surrounding countries. China’s plan to change the reality on the ground by its own say so, regardless of the wishes of her neighbours seems to follow (some of this hasn’t happened yet, so there is a bit of conjecture here) 3 steps:

A) Appeasement. “We don’t want the trouble, and the pain is not over the threshold that really requires a response”

B) Naked Opposition. 10 years ago,  things may have stopped at appeasement for some time. After which the facts on the ground would have been established and it would be essentially too late to do much about it. With the rise of nationalism and a rightward swing in many countries (most recently in the Philippines with the election of Duterte) – you dont have to be a big player to cause trouble – China loves to bully its neighbours as is clearly visible in the case of SCS – but the neighbours are increasingly less and less afraid to fight back.

C) War. No one wants this, because there is no telling how it would end. The chances of it going nuclear are very real. A national conflict involving China and a US ally that could either conceivably draw the US in, or cause humiliation and a withdrawal from the US in the area – the US currently is clear that That calculus alone means

So why is it a trap for China? If you look at cost/benefit, the costs to China are enormous. The US has many bases abroad, but very few of them face opposition. They are a fact of life for many countries. SCS reclamation, development and defense on the other hand faces universal opposition. China may well think this is just a cost of doing business, but nearly every surrounding country has a vested interest in amplifying that to make the cost to China as great as possible. I think many people are incredulous that China could be so tone deaf to the consequences of their actions, and even more so about their current methods of achieving their desired outcome. I can only imagine that this makes the 6pm news in Beijing the best hour of the day for many Chinese, we’re socking it to ’em everyone, you better keep cheering for the home team. Elsewhere however, people are pointing to agreements and treaties that they have signed, and blatantly ignoring. The US sometimes does exactly the same thing, except they drag others along with them and convince them to add time and resources (think Iraq and the coalition of the willing) – China doesn’t even bother with this sop. It just charges in and thinks it can do as it likes.

In some small part, and I think this has not really been picked up at all in the media, I think Donald Trump’s rise is in some small part attributable to the rise of nationalism in China. President Xi Jinping is one incredibly scary guy. Very widely considered to be the most authoritarian leader since Mao, has taken over direct leadership of the military  (Financial Times article), Xi must walk a tightrope of conflicting demands, rising social tension, falling growth, a population that is aging faster than any other country (and even the relaxation of the one child policy is neither showing any effect, Economist article from 2011, nothing much has changed even though the law was changed in exactly the way the article describes), the fracturing of the country along the relatively affluent coastal cities who are the trade hubs with the west, and the impoverished west – none of these are problems that are going away quickly, and the CCP response to all of these has been to increase the repression and block the media. I’m fairly ambivalent on all of this – it remains to be seen what the outcome will be – I only mention it to point out that the good run China has had to date is well and truly over. What’s next is anyone’s guess.

As Sun Tzu said in the Art of War “When weak, appear strong, when strong, appear weak”

China is appearing a little too strong currently. Look beneath the surface and the reality over there is not good. Do I take back what I said in the original post about China wont be crashing any time soon – I’ll rephrase it – I don’t think anyone can tell what is going to happen over there now. China is not the west, refuses to be dealt with on western terms, and how thing plays out from here are anyone’s guess.

Will China Crash

The answer in short: No.

There is a level of paranoia about China, the rise, the methods, and who stands to gain and lose out of this ascent. They are an unknown quantity, an opaque figure with seemingly few friends, but an enormous and growing influence that buys a seat at any table it chooses.

I’ll take a different tack in the way I look at this. To start with, galling as it is for China, they have a lot to thank the Japanese for in their strategy. What China has done is more or less a carbon copy of what Japan did 40 or so years ago. With one critical difference that we will get to. Japan figured out very early on that manufacturing and export earns cold hard cash. The first trade deficit they had in 30 years was in 2011.


This was as a direct result of the Fukushima eathequake and the idling of their nuclear power stations and follow on reliance on fossil fuels.


$248 billion in 2012 for fossil fuels. It isn’t hard to see why they need to restart the reactors, but thats not the point here. The point is despite the “lost decade”, Japan’s economy is still very strong, and natural disasters aside, it would have remained so. Healthy trade surpluses are healthy trade surpluses. They weren’t made a big point of in Japan, everyone seemed a bit too focused on growth rates or the lack thereof. Back to China. They have followed Japan in making their economy export driven. And its working for them. Even with the downturn in Europe and the US only now getting back on its feet, China still posts solid gains in export earnings.


How much you believe that is up to you. By other measures it looks on the high side:


Li Keqiang  (Chinese Premier) said in 2007 that the GDP figures are “Man-Made” and for “reference only”


So its hard to draw a solid conclusion, and will get even harder as China’s economy slows – local governments are told to reach a figure, but no one knows how they do it – borrowing, debt fuelled construction, who knows, the figures are not available, and what is seems questionable.

So to go back to the subject line – will China crash – we need to draw in 2 more points before making any conclusion. Firstly is who owns the businesses in China that export, and secondly demographics and cost-of-manufacture and how this is changing. No mention of debt levels, shadow banking industry or corruption – thats in another post.

Ok, so who owns the industry in China – the exporters are generally not Chinese brands, with a few big exceptions. Apple, Nike, Sony, Toyota, etc, all use Chinese labour. But they dont HAVE to, they use it simply because the cost is cheaper. There are very few Chinese name brands – Huawei, Lenovo and Haier are among the few exceptions. As wages in China rise, the very thing that China offered to the world vanishes – cheap labour. And its unfortunate that the world regards China as a factory to make its goods for it, but the jump to a “knowledge Economy” and a move away from manufacturing is very difficult to do in practise. It cannot be done quickly. And it makes for massive inequality along the way. Factory workers are the backbone of an economy. Certainly true in China’s case. But the squeeze is on for China – on one hand rising wages, and on the other hand non-Chinese brands who will move if the price is not right. Stratfor has posted about the 16 countries identified as follow-ons for China, the “PC-16”


One quote from that report “The arcs along which nations rise and fall vary in length and slope. China’s has been long, as far as these things go, lasting for more than 30 years. The country will continue to exist and perhaps prosper, but this era of Chinese development — pyramiding on low wages to conquer global markets — is ending simply because there are now other nations with even lower wages and other advantages. China will have to behave differently from the way it does now, and thus other countries are poised to take its place.” – it makes for interesting reading, even if you dont agree with it.

And the final point before the conclusion is drawn – demographics.


This is a problem that many countries are facing, but will likely hit China much harder than others. The “one child” policy and the lack of immigration are going to put massive strain on the country as the population gradually ages. This has to be tackled now, and they are starting to relax the one Child Policy in the latest 5 year plan. As in Japan’s case, immigration on a large scale will be avoided at all costs.

So – conclusion – will China crash? Up until now China has had a good run, and the west has a lot to thank China for, but the pressures are steadily mounting – growth is slowing, population is aging and wages and costs are rising. To add to this, local governments are now saddled with mountains of debt and there is corrption on a grand scale.


For a taste of how far the corruption goes there.

So for now, China wont crash in any major way, but it is likely to slow a lot more.

It will still be an important player on the world stage, I doubt it will ever reach no.1.