Zkauba

[Zkauba @Zkauba89]

@joequant Dude doesn't know what dynamic subsidies are

[Zkauba @Zkauba89]

The more immediately salient point, however, is the declining cost and rapidly increasing quality of capital goods and material inputs that lower barriers to industrialization. "Overcapacity" doesn't just make the phones cheaper; it makes the machines that make the phones cheaper and allows them to diffuse more widely

[Zkauba @Zkauba89]

@D162Michele Many such cases

[Zkauba @Zkauba89]

Just spitballing here, but I'd imagine we'd see an earlier renationalizing of strategic sectors, a crackdown on the oligarchs and capital flight, and a defusion of the Chechyan situation. The result would most likely look a lot like modern day Belarus- market socialism with relatively rapid growth

[Zkauba @Zkauba89]

@FemCondition And, of course, the whole damn thing is a giant base rate fallacy, because mortality rates for males exceed those of females in every age bracket

[Zkauba @Zkauba89]

@FemCondition Judo is apparently a useful martial art for using the enemy's momentum against them

[Zkauba @Zkauba89]

@GabeZZOZZ @grok This is completely tangential to your post, but I find Western talk of opposition to Putin one of the lulziest things ever given that the largest opposition party in the Duma is the literal Communist Party

[Zkauba @Zkauba89]

@FemCondition @MichaelGLFlood @PhilMitchell83 It also has no construct validity. As I've argued elsewhere, it's an arbitrary grouping of negative characteristics unsupported by factor analysis

[Zkauba @Zkauba89]

@BeijingDai @RnaudBertrand posted a paper on this. Local governments partnered with local EV firms to compete against the giant SOEs, generating a highly dynamic sector

The post in question: https://t.co/fDp8qJHAxU

[Arnaud Bertrand @RnaudBertrand]

This is a really fascinating paper that everyone interested in China's industrial policy should read.

It destroys so many myths (see below), and is written by deeply credible people who conducted over three years of fieldwork in China and interviewed 60+ Chinese officials, entrepreneurs, and engineers. When it comes to China studies, it literally doesn't get more rigorous than this.

First myth it destroys: contrary to popular belief, Beijing's industrial policy didn't build the companies that became China's EV champions. They rose largely **despite** it, through its cracks.

For sure, Beijing did favor EVs as an industry and pushed hard for it but their big bet was SOEs (State Owned Enterprises): research grants, pilot programs, licenses, cheap credit - virtually all of it flowed to state firms.

The result? China's actual EV champions - BYD, Geely, NIO, XPeng, Li Auto, etc. - are overwhelmingly private firms that succeeded despite Beijing favoring their SOE competitors.

How so? Because, when favoring SOEs, the central government didn't just pick winning companies, it picked winning cities, each SOE being anchored in a specific city: Shanghai (SAIC), Changchun (FAW), Wuhan-Shiyan (Dongfeng), etc.

Which means that every city not on the list, that wanted a piece of the auto boom, had only one option left: team up with private entrepreneurs who were equally excluded from central government favor.

That's what truly fueled China's EV miracle: an alliance of the excluded, between local private entrepreneurs and local mayors.

This is the biggest misconception this paper destroys: the reality is that the "Chinese state capitalism" that many in the West think powered the EV boom actually tried to block many of these companies from existing. In effect, it was closer to an obstacle course that local actors (mayors and provinces) learned to game.

Geely - now the third largest automaker in China - is a fantastic example of this.

First of all, it started off illegal since, to build passenger cars, you had to have a central government license and they couldn't get one. Zhejiang Province told them to go ahead regardless because the province had hundreds of auto parts suppliers but no carmaker of its own.

It's only a couple of years later, recognizing the fait-accompli that Geely was producing cars and was competitive, that the central government admitted them to the National Sedan Catalog - effectively legalizing them retroactively because there were facts on the ground.

Then there was the Volvo acquisition in 2010, which is fair to say - looking back - proved to be the most strategically valuable acquisition in Chinese automotive history. Despite it being presented at the time (and still described this way today) as "China buying Volvo", all 3 major state-backed banks in China (Export-Import Bank, China Development Bank, Bank of China) refused to finance the deal. The only state-bank money Geely managed to get was a $200 million loan from a provincial branch of China Construction Bank - a tiny fraction of what the deal required.

Geely actually did the deal with Goldman Sachs money via Hong Kong plus loans and equity from four local governments (Chengdu, Zhangjiakou, Daqing, Shanghai's Jiading district), each of which bought in by securing a Volvo plant or headquarters for itself.

In effect, the doors that Beijing controlled were largely closed to Geely, but it made it because the doors subnational actors controlled were opened.

Which all means this paper destroys another very common myth: the big merit of the central government in all this was to be relatively chill about it, to NOT be dictatorial.

I just imagine if that had happened in France and you had - say - the mayor of Lyon or Marseilles open, fund and promote an unlicensed carmaker against Renault: the préfet would shut it down within weeks, and the mayor would be lucky to escape prosecution.

That's the irony: on industrial policy, the supposedly "totalitarian" Chinese state proved more tolerant of local defiance than most Western liberal democracies would be. Beijing's greatest contribution to the EV miracle wasn't the plan - it was looking the other way while the plan was being violated.

To be sure, the paper doesn't hide the costs of this system: ferocious local competition also produced what's known today in China as "involution" (内卷-Neijuan, basically a hypercompetitive price war), as well as some spectacular failures. For instance one county lost 6.6 billion yuan on a carmaker that never really made cars.

But that's precisely the point: this is a high-risk, high-reward model of decentralized experimentation, the very opposite of the careful central planning Westerners imagine.

I've repeated this countless times but it bears repeating again: the single greatest misconception people have about China is - probably because we wrongly associate communism with centralized control - that it is a monolith run from Beijing. Some even say it's run by "one man."

The reality is the exact opposite: China is, in practice, one of the most decentralized countries on earth. Roughly 85% of government spending in China happens at the subnational level - against about 30% in the average OECD country (and even less in France, which is actually one of the most centrally controlled countries on earth). A Chinese mayor commands fiscal resources, land, investment funds and policy latitude that virtually no Western mayor could dream of.

Last but not least, I'd be remiss not to mention what the paper has to say on the positive legacy of Mao and its role in the rise of EVs (given I myself wrote an article titled "Mao's economic record wasn't bad, actually": https://t.co/1NZgHqBHwg).

When it comes to China myths, none is more entrenched than the idea that Mao left behind nothing but ruins.

This paper confirms a key argument of my article: Mao's deliberate dispersal of industry across China (during the Great Leap Forward and Cultural Revolution decentralizations) left dozens of cities with their own small auto works. Inefficient, yes - but these scattered factories survived into the 1990s and became the seed stock of everything that followed: the industrial base, the engineers, and the production licenses that EV startups would use to enter the market.

The paper even says it outright: the fragmentation that industrial policy "sought to eradicate" is "precisely" what "ironically enabled" the EV sector's rapid rise.

This is exactly the mechanism I described in my Mao article: structures built in the Mao era - communes becoming township governments, commune enterprises becoming TVEs, Third Front factories seeding interior industrialization - became load-bearing foundations of the reform miracle.

Fittingly, the spark for China's first municipal carmaker adventure was literally a TVE (Township and Village Enterprise), the institutional descendants of Mao's commune enterprises: Tongbao, a kit-car maker in Wuhu whose success stunned local officials into building what became Chery (one of China's biggest carmakers today). You can't tell the story of China's EV miracle without crediting the legacy of Mao.

What's the biggest lesson in all this for Western policymakers?

The obvious one is that the part of industrial policy that most people assume China does and that they sometimes want to copy - i.e. the state picking winners - is actually the part that failed.

The part that did succeed is the China nobody in the West believes exists: a radically decentralized system with a high degree of tolerance for disobedience and experimentation.

We imagine China as a country where nothing happens without Beijing's approval when the reality is closer to the opposite: China's EV miracle happened precisely because localities asked for forgiveness rather than permission.

All in all, and this is the lesson I often come back to, this is yet another illustration of the importance of understanding China for what it is as opposed to the caricature we've built of it. This matters whichever "camp" you're in. If you see China as a rival, you can't compete with someone you don't understand. If you see them as a source of lessons, you can't emulate what you've misunderstood. Whatever you want from China - to compete with it or learn from it - the entry fee is the same: genuinely understanding it.

[Zkauba @Zkauba89]

@Alex_Oloyede2 In fairness, much of that aid probably just wound up in Swiss banks and offshore tax havens

[Zkauba @Zkauba89]

Ignores unequal exchange, context (North Korea basically being locked out of the global financial system for a long time, meaning they were unable to sell what they could produce), and treats stuff like advertising expenditures as though it were of equal importance to steel and fuel production

[Zkauba @Zkauba89]

@FemCondition I would also point out that property restrictions were attached to the franchise for men in numerous countries

[Zkauba @Zkauba89]

I sat on my hands with this response, because I've been busy and it's evident that you're wedded to what amounts to a creationist delusion of culture as separate from biology, but nonetheless here goes:

And yet, nothing you have said fundamentally contradicts my core thesis. An evolved bias toward protecting women and avoiding direct conflict with them exists among men, indeed, has distinct neuro-hormonal underpinnings. If gynocentrism is too strong a term- and it becomes clear from your argument that I have applied it far more broadly and loosely than you have- we must nonetheless note the presence of such a protective bias and male aversion to intersexual conflict. This bias manifests differently in different environments, often in ways invisible to Westerners, but it exists. What little psychological evidence we have indicates the "women are wonderful" effect occurs in traditional societies, and varies in the opposite of the expected direction, being larger in them. To be a "cultural overlay on a biological system", there must be something stable to overlay, notwithstanding the philosophical problems of treating culture as separate from the biology that gave rise to it. Cross-nationally women are protected and exempt from the harshest duties and sentences and sent. So yes, there is absolutely a tendency to treat women more gently and with less accountability. Kin selection doesn't alter this; it selects for protection for relatives specifically, not the opposite sex generally. It is not an accident that female gains in life expectancy exceeded those of men across the world throughout the twentieth century. Nor can this be attributed solely to a reduction in maternal mortality, which explains only a small fraction of the gain.

And now we arrive at the problem at the heart of your argument. You say that men are the limiting factor on survival. That is absolutely correct. But your basic conclusion- that there is no tendency to value women over men- does not follow. To be necessary for survival requires a specific skill set and the ability to implement it. Repeated failure cannot be tolerated because it burdens the group as well as the family. A lazy, feckless woman still has value in terms of inclusive fitness because she represents a reproductive bottleneck; a lazy, feckless man has none. He is not conducive to survival and his reproductive capacity is easily replaced. Thus, if we accept your premises, we should still expect there to be a tendency to protect and excuse women and provide them with privileges while punishing and judging men more harshly, because men who screw up or behave in detrimental ways have no other offsetting source of value. Excusing failure and subsidizing indolence with the reproductive bottleneck can be justified in terms of inclusive fitness; doing so with the survival bottleneck cannot. There is therefore a tendency to attach intrinsic value to women. What you call modern gynocentrism does is crank this basic tendency up to pathological levels.

Trivers’ theory of parental investment is amply supported by empirical evidence. Notwithstanding mutual mate choice, women are almost always the choosier of the two.

You're correct that we are a pair bonding species. This modulates the effect of Bateman's principle, and it still operates. It is not that men don't choose, though they achieve through greater intrasexual competition; it is simply that women have a much easier time of it during their prime reproductive years. Pair bonding actually connects elegantly to life history theory for a very simple reason: pair bonding evolved in the female interest. Given limited fertility windows, it enabled females to project forward in time the effects of their peak mate value, enabling successive copulations with males of the highest status they could get rather than a succession of one off pairings with mates of declining quality as their ability to attract them faded. Provisioning was not the origin of this; it emerged from and was facilitated by it. Many monogamous species exhibit high rates of extra-pair paternity, indicating the unviability of the male control model. The role of male parental investment in the ancestral environment is weaker than assumed, given things like highly egalitarian meat sharing patterns and the ability of females to call on relations for help. But I agree- concern over paternity certainty would be selected for.

You’re correct that the current arrangement isn’t preordained, although we still see a tendency to optimize more for female utility as old material constraints are loosened. But you are fighting a ratchet. Humanity’s natural tendency to excuse women and exempt them from accountability interacts with accumulated cultural and institutional changes to block any organized movement pushing in the opposite direction. There will be no incel uprising, no great red pilling. What kills modern gynocentrism will be its own consequences- male withdrawal, female inability to find suitable men, and the inevitable. The usual suspects will simply double down. The machine will keep running, until it runs aground and breaks.

[Zkauba @Zkauba89]

@RnaudBertrand The academic reviews of his books are pretty much uniformly negative

[Zkauba @Zkauba89]

@ArmchairW It's amusing how many people fail to grasp both the concept of opportunity cost and the fact that prices are set by the world market

[Zkauba @Zkauba89]

@Fiery_Blue750 Note that this does not include false accusations that occur outside the justice system entirely

[Zkauba @Zkauba89]

@Optimistic24228 https://t.co/LodYkx1JFm

[Zkauba @Zkauba89]

@Optimistic24228 Seriously, it's the funniest goddamn thing ever. They basically admitted the neoclassical conception of capital is logically incoherent, and yet the theorems keep pouring out just the same

[Zkauba @Zkauba89]

@Optimistic24228 If you want quality lulz, look up the Cambridge Capital Controversy.

[Zkauba @Zkauba89]

@philippilk This was predictable. The Euro functions simultaneously as an overvalued lira and an undervalued Deutschmark