Markets

I learned to love economics and markets in law school. I took classes in law and economics, worked as a research assistant for CU's resident law and econ expert, worked for an antitrust boutique, loved my last-semester antitrust class (despite a raging case of senioritus), and wrote a paper about a market for software vulnerabilities. My fascination with the subject matter probably stems from the same area of my brain that drove me to major in psychology as an undergraduate. After all, economics, markets, and psychology are all ultimately about human behavior. But looking at China through these lenses teaches me about the Chinese weltanschauung like nothing else.

Take the lucky number phenomenon. The Chinese are nuts about lucky numbers, whether it's the number attached to their SIM card or the number on their license plates. Despite the nasty temperatures in Beijing during August, Mayor Wang rescheduled the Olympics to start at 8 p.m. on 8/8/8, because eight is a lucky number. An online auction participant paid $1.1 million (USD) for a cell phone number that sounds vaguely like "let me be rich be rich be rich be rich" when spoken in putonghua. And some investors here actually buy stocks solely on the basis of a "lucky" ticker code.

Getting back to SIM cards, however, the lucky number fascination also explains why mine cost 80 yuan. We bought it before we knew about China's vigorous auction market for SIM cards, and my mobile number contains a six, an eight, a nine, and no fours. Katie's number, however, cost ten yuan in large part because it does contain a four. And during our Mandarin tutoring yesterday, we learned why this is an issue: the word si (pronounced "suh") can mean either "four" or "death," depending on the tone. So now we know why newsstands in Haidian often display boards with SIM card numbers on them, as though they're a hot commodity. It's because they are a hot commodity, at least in the Middle Kingdom.

Such a market that would be almost unthinkable in the west. But the existence of such a market highlights the role of language in shaping Chinese society. Indeed, as we learned in today's class on Chinese culture, much of the distinctions between Western and Asian philosophy can actually be traced to the Chinese language and its traditional forms of writing. So I will no longer be bothered about getting kicked out of cabs. It turns out I've often been asking drivers to take me to somewhere called "Blood-ville," thanks to my novice pronunciation.

Another lesson I've learned about China stems from the incentives and reasons for competitive collusion in China. An example: foreigners shopping for mobile phones in Beijing soon learn about the listed price and the book price. The listed price appears in the display case in front of the phones. The book, however, contains the minimum price for each model that they'll take after "bargaining." At Beijing's famous Electronics Market in Zhongguancun, the stores carry exactly the same model of phones, list them for exactly the same price in the display case, and whip out a book of listed prices that looks identical to those at competitor's stores. Just a few weeks ago, a bunch of Chinese noodle manufacturers just got busted for price-fixing. (Indeed, the noodle kaboodle served as the final push for China to pass a long overdue, much-revised Anti-Monopoly Law, that took 16 years to enact.) But the fact that this sort of behavior occurs so openly, even in the face of a prior regulation barring price-fixing, highlights the value of group-think, in particular the notion that the collective will benefit through cooperation. Granted, this is not a particularly Chinese idea, but the Chinese version of price-fixing is so blatant that it reminds you of how quickly their economy has developed in the last thirty years. In the United States, by contrast, they'd be a little more subtle.

China's "supplemental income" markets also tell a story about this nation's attitude towards the law. During the Qing dynasty, leaders openly assumed that lower-ranking civil servants would be underpaid and therefore more likely to take bribes, so magistrates were encouraged to consider fewer cases in order to reduce the likelihood that their clerks would profit from pocketing excessive filing fees. Today, fines for anything from parking tickets to court judgments come in very broad ranges, such that the enforcing officer can charge well over the minimum fine and pocket any excess. And in the realm of licensing, some economists have argued that quirks in the Chinese business licensing system, as presently designed, actually encourage bribery, which may account for Carrefour's recent troubles and China's latest execution. Regardless of the punishments, however, the Chinese still largely regard law as secondary to the central authority of the government. Indeed, as we learned in our class on the Judicial System today, the very notion that an athlete would bring a court case to protect his endorsement rights, rather than taking it up with government officials, is in itself deemed a victory for the rule of law. For me, at least, the secondary nature of law within the Chinese system is a very tough concept to wrap my head around. But it's my job and field of study, so I must.

The vegetable market, on the other hand, teaches a very simple lesson. Right around dinner time, about 200 vendors set up on the Recycling Road, such that we can't get up the street during rush hour. The prices are low and the produce is good, but we just can't bring ourselves to buy anything because the locale undermines our confidence in the quality and safety of the goods. The Chinese, on the other hand, flock there in droves to get their produce for dinner, and promptly boil it silly when they get home. To me, this explains why the United States manufacturing sector lost so many jobs.

As any farmer will tell you, most Americans are unwilling to accept a piece of fruit that's anything less than perfect, sold in an unhygienic location, and not carried home in an SUV that gets 4 miles to the gallon. The Chinese, on the other hand, will eat fish bought off of the dirtiest street imaginable for pennies on the dollar, take it home in an unwashed recycled plastic bag, and eat it in horrible living conditions that Americans would never tolerate. They are hungry, both as a nation and as individuals, and they are willing to live in homes that we could never stand. Oh, and just in case you haven't read the Economist in the last 30 years, they're kicking our butts economically largely because their population is willing to do things that ours isn't.

So, in essence, China is different. But to state this amounts to both an understatement and an unimaginative mantra. It's trumpeted every day from the front page of every Western news publication, with a none-too-subtle "and we should be scared of them" xenophobic undertone that belies a raging ignorance. For me, however, I'm trying to figure out why, because the conclusion is the easy part.