To Get Rich Is Glorious

My post title here is of course Deng Xiaoping’s slogan celebrating the opening of China’s economy to private enterprise. It is also an allusion to the tendency of prominent academic economists to line their pockets by serving as (typically secret) “hired guns” for controversial entities, be they corporations, trade groups or nations. Alan Tonelson’s latest blog post on Columbia University’s Jeffrey Sachs’ troubling defense of China in the Huawei case combines both of these aspects.

As Alan points out, there is nothing inherently wrong with an academic writing in support of some entity. But as I have noted, if the academic in question is accepting funding from that entity, serious ethical issues arise:

If one takes money from a given source and wants to continue receiving the funds, one cannot do work antagonizing the source. It’s that simple.

And the corollary is that, if the entity asks the academic to write on something specific, it’s difficult if not impossible to decline.

Well, then, was Sachs accepting money from Huawei/China? As Alan reports, the Washington Post‘s Isaac Stone Fish asked Sachs point blank on Twitter,

Hey : you just published an article praising Huawei and criticizing the U.S. government…Last month, you wrote the forward to a Huawei report Did Huawei pay you for that? If so, don’t you think you should disclose that?

Alan notes that Sachs then blocked Fish from following Sachs’ Twitter feed. But there’s more.

Sachs did reply that he had received no Huawei funding. But then I wrote,

Just to be clear: Huawei has not funded Columbia or your organization?

He did not respond.

Then, after having taken so much flak on Twitter, Sachs actually closed his own Twitter account, quite a move in view of the fact that he reportedly had 250,000 followers.

In spite of China’s many recent troubling actions, there are things that economists might praise. The question is whether the praise is given in full sincerity.

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US Media Missing the BIG News

Last Wednesday at 10 pm, I decided to check the TV news. Here’s what I found: The Chinese-language channel KTSF led with the latest on Canada’s arrest of Huawei’s CFO, with a US request to extradite; the local English station KTVU (Fox, but liberal) led with the Bush funeral; and CNN…well of course, it was Mueller, Mueller, Mueller as usual.

Arguably, only the Chinese program got it right. US-China relations are spiraling out of control. China is threatening” severe consequences” for Canada’s cooperation with the US, taken to mean arrest of Canadians in China, and of course denounced the US for “illegally” requesting Canada to extradite Meng Wanzhou, the Huawei CFO. The US State Dept. had previously issued a Travel Advisory for Americans considering going to China. And who would dare go even if the advisory is lifted, not only with this event but many other troubling actions by China in the last couple of years, e.g. the disappearance of the Interpol chief, a Chinese national?  At great risk is the already-shaky US-China relationship, with potential major economic, political and even military adverse impacts for both parties. China is fiercely demanding Meng’s release.

The evidence revealed so far is scant, as it is just for the bail hearing. Meng is accused of directing the financial aspects of Huawei’s secretly violating its agreement with the US not to sell sensitive equipment to Iran, and in so doing, engaging in bank fraud.

In addition to the possible global implications, the case is certainly making for good high drama. Meng owns two homes in Vancouver, one valued in the  millions and the other in the tens of millions. One was the subject of a mysterious home invasion attempt over the weekend. Meng has been married two or three times. Her half-sister is a Harvard debutante. Meng has at various times been in possession of about seven passports.

Meanwhile, tragedy: Stanford professor Zhang Shoucheng committed suicide last week. He was originally from China and had close ties to the Chinese government and, it is reported on the Chinese-language news in the US, ties to Meng as well. He co-directed China’s Thousand Talents Program, itself the object of controversy. According to the South China Morning Post, a respected English-language paper in Hong Kong,

Zhang’s contribution to the quantum field earned the recognition of not only his peers but also of the Chinese government. In 2009, Zhang was hand-picked to be part of an expert panel for the state-run “Thousand Talents” programme that aims to attract overseas scientists. US Pentagon and intelligence officials have branded the decade-old recruitment drive as a platform to “facilitate the legal and illicit transfer of US technology, intellectual property and know-how” to China, according to reports earlier this year.

Zhang was head of the VC fund Danhua, a firm that had been mentioned negatively in a 301 trade practices report involving connections to China. Many rumors are going through the Chinese-immigrant community that he was murdered rather than having taken his own life.

Chinese President Xi Jinping is shrilly demanding Meng’s release, all charges dropped. This seems uncharacteristic of him, so what is the driver? According to controversial Chinese dissident Guo Wengui, the real impetus is coming from the family of former Pres. Jiang Zemin, who supposedly have huge financial interests in Huawei and related firms. It could also be that China is afraid that even more damning information will emerge if Meng is brought to trial in the US.

And of course, there is national pride involved, as Huawei is viewed as the epitome of China’s emergence as a tech power. That pride has also been seriously wounded of late, with a similar case involving the Chinese firm ZTE, in which among other things was a major wakeup call to China, exposing just how dependent Chinese tech is on the US.

These things have been brewing for years, of course. Huawei has been accused of stealing technology long ago from Cisco and Nortel, contributing to the demise of the latter. And recently, fearing backdoor spy channels in Huawei equipment, the US and several other nations have banned the use of that equipment in military use.

But now things are coming to a head, suddenly and dramatically.

It is also bringing out the old and sensitive question of loyalties of immigrants to their adopted countries. Vancouver has a very large Chinese-immigrant community, and there have been protestors from that community, again demanding that the charges against Meng be dropped and she allowed to go free. They say there is “no evidence” against Meng, though again they would have no way of knowing this. Some Chinese in the audience at the bail hearing have been conspicuous in that a patriot song is played as the ringtone when their phones have incoming calls. A UBC professor who is originally from China, in an interview with a local (English language) TV news program, flatly stated that the sole motivation of the US in the Meng case is to stifle economic competition from China, hardly the impartial, nuanced analysis one would hope from an academic.

The Mueller probe won’t have big effects, I believe. It won’t contain any smoking guns about Trump, and will be milked by House Democrats just for publicity. But the Meng case could indeed have serious, long-lasting global impact. At least TIME has noticed, with an article titled “It’s Hard to Overstate How Big a Deal the Huawei CFO’s Arrest Could Be.”  Maybe CNN et al ought to devote more than a minor mention of the case.