The “US in 1887 = China in 2007″ meme is rippling through the blogosphere and I thought we should do our part. The idea is basically that these two countries, around the years listed (+/- several decades) are actually very much alike in terms of various consumer protections and intellectual property rights. Stephen Mihm, assistant professor of American history at UGA writes in The Boston Globe:
China’s brand of capitalism looks increasingly menacing and foreign to our own sensibilities. … [But a] century and a half ago, another fast-growing nation had a reputation for sacrificing standards to its pursuit of profit, and it was the United States.
As with China and Harry Potter, America was a hotbed of literary piracy; like China’s poisonous pet-food makers, American factories turned out adulterated foods and willfully mislabeled products. Indeed, to see China today is to glimpse, in a distant mirror, the 19th-century American economy in all its corner-cutting, fraudulent glory.
This point has been made in UES meetings before as well, with some regularity when the topic of intellectual property comes up. But here’s a money quote:
One hundred and fifty years ago, even America’s closest trade partners were despairing about our cheating ways. Charles Dickens, who visited in 1842, was, like many Britons, stunned by the economic ambition of our nation’s inhabitants, and appalled by what they would do for the sake of profit. When he first stepped off the boat in Boston, he found the city’s bookstores rife with pirated copies of his novels, along with those of his countrymen. Dickens would later deliver lectures decrying the practice, and wrote home in outrage: “my blood so boiled as I thought of the monstrous injustice.”
The article is an interesting survey of the parallel, albeit a bit short on the big picture. WSJ’s Informed Reader blog has a cursory review, but contributes little more on the subject. Dan Harris at the China Law Blog, a must read for anyone interested in interacting with the country some day (and you should be since you will), says a little more, taking a commenter on WSJ to task for underrating the influence of the internet in China. I don’t think any of that is to be denied, but I submit this parallel is indicative of something bigger: enforceable property rights.
I was first turned on to this by Hernando de Soto in The Mystery of Capital. He makes the exact same assertion that Professor Mihm does — but it comes with an articulate vision of why the countries are more similar than dissimilar in these ways, tying it back to the legal protection of property rights. You can see pg. 71 of the book:
What is understood all too rarely is that the Third World and former communist societies are experiencing nearly the same industrial revolution that arrived in the West over two centuries ago. … Britain supported just 8 million people when it began its 250-year progression from farm to laptop computer. Indonesia is making the same journey in only four decades and is carrying with it a population of 200 million. No wonder its institutions have been slow to adapt. …
The failure of the legal order to keep pace with this astonishing economic and social upheaval has forced the new migrants to invent extralegal substitutes for established law. [...]
Entrepreneurship triumphed in the West because the law integrated everyone under one system of property, giving them the means to cooperate and produce large amounts of surplus value in an expanded market.
Everything in the book is rather good and I encourage people to take a look. Applying all this theory to the facts, then, what we see is that China is a far-flung country comprised of several different ethnic groups, religions, and even more languages. Although China has a strong central government, its long arm is felt more in some provinces than others, meaning that different standards used for applying the law in different places within the country. We won’t have discuss how hard it is for a Tibetan to get a passport. And while the US didn’t have as many languages, it certainly had its share of groups, religions, and differences in government efficacy. Oftentimes, and this is obviously still true to some degree everywhere, power simply follows the money, where it may be. A terrific cinematic depiction of this sort of life in 1887 America is Kevin Costner’s outstanding Open Range. And this is what that looks like in China now (or how it seems from afar for most of the country).
In summary: do you have legally enforceable rights to your property? Do you have recourse to the Courts? None of this is meant to say we do not struggle with this in the US still today, but of course the situation is much much better. And the situation in China will probably improve similarly.
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