In the past year, I made a lot of mistakes. I disappointed some people.
My biggest wish for the Year of Horse is to be less wrong.
More balance, more self-control and more wisdom.
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Five minutes later we will enter the Year of Horse.
In the past year, I made a lot of mistakes. I disappointed some people. My biggest wish for the Year of Horse is to be less wrong. More balance, more self-control and more wisdom.
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When Mitsuko Uchida shows up, you know that you are going to have the best music. This woman plays music with her whole body and soul. Every movement, every gesture and every facial expression is full of music. If you don't watch the video but only listen to the audio of her performance, you are missing a big portion of it. Uchida herself is music. Music flows when she is walking, talking and waving. She creates a universe of music that engages every musician around her. She makes everyone around her, the orchestra and the whole audience, involved in music. My mentor, Prof. Yoram Barzel, loves economics so much that I suspect he has become part of economics. Dr. Patrick O'Brien, one of the greatest historians in our age, I suspect, has become history. (My friend told me that he traveled from London to Oxford by train every week to attend economic history seminars in his 70s.) Love your profession. Become part of your profession. Otherwise, how can you find the Dao in your profession? When you begin to ponder the secrets in everyone's heart, you are ready to be a novelist.
When you begin to observe the color,the shape and the shade of every object, you are ready to be a painter. When you begin to hear the inner rhythm of everything and be alert to every sound, you are ready to be a musician. When you begin to notice the beauty and amazing effect of every word, you are ready to be a poet. When you begin to analyze every market behavior and organizational structure, you are ready to be an economist. When you begin to associate everything with its past and its future and see the dynamics of every event, you are ready to be a historian. When you begin to ponder the mechanics of every physical movement, you are ready to be a physicist. When you begin to notice every breath you take and watch every small change in your body, you are ready to be a Kung fu master. When you are able to do everything above, congratulations, you are a Buddha! In Peking University, there are many wild cats. People love cats and feed them with all kinds of food. Therefore, some of them grow really fat, like this. This is an example of the unintended consequence of benevolent behaviors. We may also say this is another kind of "tragedy of the commons". The traditional definition of the tragedy of the commons is that the common lands deplete because people over-exploit the common resource. People over-exploit the commons because they are selfish. But this is a different scenario. People give too much food to animals in the public sphere because they love animals. (They may just leave food at some places rather than feed the animals directly.)
Many animals have no control of their appetite and accept food whenever they find some. Since food is easily available, they become overweight. This benevolent behavior can hurt animals severely. For example, the animals may be too fat to move fast and therefore be caught by predators. They also become too lazy to find food by themselves. If some day people stop feeding them, they may starve. The lesson is that both selfishness and benevolence can cause tragedies of the common resources. Writing from the brain seems to be the western style. Writing from the heart seems to be the oriental style. We might say that the western style is masculine. It's analytic. It's powerful. It's based on reason. It's conveyed by discourse. Men have always been engaged in public sphere, debating and discussing.
The oriental style is feminine. It's intuitive. It's obscure. It's based on feelings and sensations. It's embedded in self-reflection. Most of history women stay at home, meditating and dreaming in their own rooms. There are heterodox western writers who seem to prefer the oriental style. For example, Ralph Waldo Emerson. Jacques Derrida once remarked that he wanted to "write like a woman". Ultimately you choose your own style that suits you the best. It could be western or oriental or a mixture of both. I dare not say this if I were in the United States. (You know why.) Glad I'm in China. :) There is hardly any paper in social science which is as widely cited as G. Hardin's The Tragedy of the Commons. It has been cited more than 22,000 times. There is hardly any concept which is as powerful and intuitive as the "the tragedy of the commons". If the common lands were always a tragedy, why did this regime persist in the middle ages for so long? Why does it still exist in many places of the world? (That's exactly the question that motivated Prof. Elinor Ostrom's researches.) Here is one answer from Marc Bloch's French Rural History. (This book is my bible, by the way.): "The bond created by collective obligations in the cultivation of the arable was strong; but stronger still was the bond uniting a village group which possessed common lands, no matter what agrarian regime prevailed over the rest of the fields..... The little parish of Saci, since it has commons, governs itself like a large family." How important was it for village communities to have the common lands as a bond uniting the villagers? What was the benefit of having the commons? What was the cost? Does the benefit compensate the cost? Have you ever watched Akira Kurosawa's classical movie Seven Samurai? If so, you might be able to understand the benefits of common lands. When a village that is not protected by the state is plundered by bandits, the village community has to unite its forces or hire samurai to fight against the bandits. If lands were privatized, then everybody would only care about his own land. Those who are less likely to be looted would not want to protect their neighbors. Of course, when their neighbors have nothing, their bad fortune will arrive. There is an interesting plot in the movie which tells exactly this story. In order to fight against the bandits, the hired samurai asked the villagers who lived on the other side of the bank to move. Those villagers were reluctant. One of them shouted:"Why do we have to sacrifice our own homes to protect others'?"
Now we can summarize the conditions for the persistence of the commons: First, the villagers have to fight against a strong enemy through collective action. Second, the village communities are not protected by the state. This can mean that the state bureaucrats are the enemy of the village when they levy heavy taxes. In short, the COMMONER‘S tragedies could be the reason for the persistence of the commons. I have gained some experiences in jewelry making. One lesson I learnt is that all natural gems are imperfect. They always have some blemishes, big or small. If you find a "perfect" piece of jade, it must be fake. People still prefer genuine jade with small flaws to fake jade that looks perfect.
The same thing happens in research. All researches, no matter how carefully carried out, are imperfect. All books, no matter how polished they are, are imperfect. All theories, no matter how sophisticatedly designed, are imperfect. Moreover, every great theory will be revised by a better theory. Every brilliant mind will be superseded by a more brilliant mind. If you study intellectual history, you know that the new supersedes the old is the universal rule in history. Any attempt to become the last is doomed to fail. You may become the best contemporarily. But you cannot be the last in history. To realize this is to relieve us from the pressure of perfectionism. To deny this shows a lack of understanding of intellectual history. There is an old Chinese saying that "A Blemish Does Not Obscure Jade's Luster". Even though Newton's theory is revised, no one will deny his greatness. Even though some of Alexis de Tocqueville's arguments are proved wrong, no one will deny his profoundness. The important thing is that they changed the way people looked at the world and their thoughts are still influencing people today. We all stand on the shoulders of the giants to improve their findings. But we should also allow others to stand on our shoulders to improve our findings. This is , I think, the most important role of a teacher- to give birth to genius. Chinese consumers are used to bargaining in almost any market,small or big, retail or wholesale, even in supermarkets and department stores. Why is bargaining so common in China? The dual question is: Why is bargaining so rare in the United States? The first answer I came up was that bargaining is more common in a market with a large number of competitive suppliers. Bargaining is a process that "forces" the price to reach equilibrium price. Then I found that I might be wrong. In the United States, even in farmer's market, I had few opportunities of bargaining. The prices the strawberry sellers label mean the real price they are willing to sell for. At Seattle's Pike Place market, I tried to bargain with a craftsman who sold key rings. But she refused to bargain with me. Another counter-examples is that the salespeople in big department stores in China usually have the discretion to give a secret discount. The discount is not explicitly stated. But smart consumers know that and take advantage of the salespeople's discretion. The fact that the discount is not explicit stated suggests that it must have violated the rules to reduce the price. According to the rules of the department stores, suppliers cannot give extra discount beyond what is previously planned and agreed. But these rules are often ignored. Let me tell a really interesting story: I enjoyed the secret discount only once in America. That was in a Macy's store in Queens, NYC. My husband bought a suitcase and he was offered an additional discount by a salesperson who tried to grab the business from another salesperson. That guy was a Chinese American!
However, consumers should not believe naively that they are really benefiting from this practice. The salespeople must have already taken into account that the consumers will cut down the price and ask for additional discounts. Therefore, the original price they set must be much higher than the true reservation price. That's why we Chinese don't take the price on the label seriously in markets with serious asymmetric information. Dear foreign friends, if you visit a small Chinese store that sells jade, jewelry or clothes, do not believe the labeled price. Cut that price into 1/3 or bring a Chinese friend with you! So why bargaining happens frequently in China and rarely in the US does not seem to be merely a question about the scale of the market itself. There seems to be a coordination problem.There seems to be an issue of trust and credibility of price information. Regulation and enforcement may also play an important role here. Has this challenged some conventional wisdom about market behaviors told in the textbooks? Most books that provide excellent reasoning are too "cold" to touch our heart. Most books that touch our heart do not have profound insights from deductions and inductions. Behind the scene it is the seemingly irreconcilable tension between the spirit of science and the spirit of humanities.
But Marc Bloch reconciled them. The following paragraphs are quoted from the foreword of Bloch's French Rural History written by Bryce Lyon: "Marc Bloch lived life as he wrote history: he always chose the difficult and spurned the easy. " "Realistic, shrewd, and observant, Marc Bloch was bent by temperament towards economic and social history. Yet neither history nor life were narrow for him; he was broadly cultured and he hated compartmentalisation." "His acute sensitivity to his surroundings, his love of tramping the countryside, and his delight in talking with local people and antiquarians dictated the historical route he was to travel. He needed only to broaden his knowledge and develop a methodology." "He read deeply in the literature of all the disciplines related to the land and its exploitation. He did even more: he observed and constantly asked why. " Cheating in Chinese universities is notorious. These days as the communication technology advances, cheating becomes ever easier. Recently there was a big scandal that the MBA center of Harbin University of Science and Technology helped their applicants cheat in the exam through radio broadcasting. The officials in the MBA center announced the correct answers in the radio so that MBA applicants with receiving equipment could get the signal and pass the exams. There are two types of cheating: 1) cheating initiated by students. This includes individual cheating and group cheating. If a group of students help each other cheating, it's regarded as group cheating. 2) cheating initiated by the institution or the instructor. This is collusion between the institution/instructor and the students. If the institutions make profits from tuition, such as MBA centers, they have an incentive to help their applicants get into the program to charge more tuition. Thus, type 2) cheating may happen. If the institutions are not-for-profit and their reputation builds solely on the performance of their students, they have an incentive to catch cheating behaviors. However, it's still possible that the instructors or other related people want to help their students cheat in their own interest. For example, if the instructors' performance is positively related with the students' grades, they might have an incentive to help cheating. As a new teacher, I witness the great effort of our school, a non-profit institution, in preventing cheating behaviors. The cost of preventing cheating is enormous.
1. Costs for course instructors In our school, each instructor is supposed to give two sets of exam papers with different problems. The last moment before the exam, the instructor randomly decides which set of exam papers will be used. The cost of designing an extra set of exam papers might be 2 workdays or as long as a week. 2. Costs of proctoring the exam For each exam, regardless of its scale, the university sends up to five (!) faculty members to proctor the exam. 1)The instructor is supposed to be there, of course. 2) Another faculty member is assigned to proctoring the exam, perhaps in order to prevent the collusion between the course instructor and his/her students. 3) A graduate student is added to the proctoring team. This student helps with coordination between proctors and do some tedious work for the teachers, such as distributing or collecting exam papers. 4) A patrol sent by our school will walk around to supervise the proctors within the school. 5) One or two patrols sent by the university will walk around the campus to supervise the supervisors and proctors in different schools. Each exam lasts 2 hours. During these two hours, the supervisors and proctors are supposed to do nothing except watching the students. Let's assume that there are 200 courses offered by our school. Each course takes off 2 hours from a faculty member and a graduate student's research time. In total, we lose at least 200*2*5=2000 hours' research time. What a huge deadweight loss!! I participated in section 2). What were my obligations? First, I came in at least 15 minutes earlier to announce the rules of the exam, emphasizing what behaviors will be regarded as cheating. Second, I signed up to let the university know my presence. Third, I helped distribute the exam papers. Fourth, I filled out a form with information about the performance of students during the exam. If there is anything emergent, I am supposed to report it in the form. Fifth, when the patrol came in, I signed my name in another form kept by the patrol to prove my presence. 3. Costs for students Only a small number of students cheat. But the majority bear the costs as well. These costs include the following: 1) Students should come to the classroom earlier and wait for the seating arrangement. Students are assigned with seats randomly to prevent group cheating. 2) Students need to put all their belongings in the front of the classroom, including their cellphones and laptops. 3) Students need to make a verbal oath that they will not cheat in the exam. 4. Costs after the exams Multiple forms need to be filled out when it comes to the grading process. To ensure fair grading, the exam papers will be examined by universities. The university has to assign manpower to read the forms collected from supervisors and proctors. You might ask:"Why don't you give up exams and let students turn in term papers?" Sorry, this is not an option for undergraduate courses. You MUST give exams! In summary, this is a war in which everyone is against everyone else. The design of the whole process follows the rule under "veil of ignorance", since we don't know who will be cheating and who will assist cheating. Huge deadweight loss incurs when every loophole needs to be inspected and fixed. As a new teacher who just experienced many exams in the U.S., the contrast between the loosely proctored exams in the US and the war-like exam arrangements in China makes me ponder this fundamental determinant of market efficiency: TRURST. Without trust, enormous amount of resources will be wasted in preventing the small number of cheating behaviors at the expense of the whole society. Fortunately, we see some hope. A recent meeting of China's central government said:"credibility is the foundation of China's market economy, and tackling the lack of honesty will benefit projects like increasing employment, stimulating consumption, improving livelihood and boosting social development." American economists evaluate scholarship by the quantity and quality of the publications. Many young Chinese institutions not only master the spirit of this measurement system, but also advance that. For example, the evaluation of the performance of economists can be based on the quantity and quality of the publications weighed by the number of co-authors. Some institutions clearly specify that articles published at the top five econ journals have a higher weight and pay handsome bonus for such publications. The number of research grants one receives is also regarded as one important dimension.
What behaviors do we expect to observe under such incentive scheme? First, scholars won't pay much attention to teaching. Training students is a costly project that does not bring quick effect. You have to chat with students frequently and help them correct their mistakes. The opportunity cost is high under tenure pressure. Second, scholars would like to find co-authors who have broad academic network. Young scholars are eager to borrow reputation from older co-authors who have rich publication records. Journal editors are especially favored because everyone wants to be friend with them. Third, scholars tend to choose projects that can yield fast publications. For young scholars, the safest thing to do is to situate one's work into some influential scholars' research agenda. I do not mean to blame this measurement system. Is there a better alternative in China now? I doubt it. Institutions are endogenous. The adoption of such a measurement standard is based on the average quality of research, the goal to eliminate plagiarism and cheating, and the overall confidence of Chinese scholars. As long as Chinese academia still feels inferior to American academia, this measurement system will persist, I suspect. But I would like to introduce a traditional standard. This is not really a formal measurement. But it contains some profound philosophy of our nation. To evaluate a scholar's lifetime achievement, people not only look at the quality of his/her own publications, but also look at the students' achievement. A scholar's intellectual achievement is inherited and spread by the students, thus, the students' achievements should also be counted as the mentor's, albeit with some discount. Under this standard, a scholar's wisdom will last as long as the intellectual lineage does. Moreover, a scholar expects the best students to bring new discoveries and expand the lineage so that the lineage could perpetuate. The great thing about this measurement standard is that it helps inter-generational transfer of knowledge. If mentors had "ownership" of their students' achievement, they would work harder to train their students. In the old days when books were expensive and information distribution was costly, masters relied on their students to distribute their ideas. The mutual dependence of masters and students facilitate the preservation of knowledge. Without Plato's work, we wouldn't know Socrates's greatness. Without his students' records, we wouldn't know Confucius's greatness. Keynes said:"In the long run we are all dead." Dr. Stanley Fischer corrects Keynes:"In the long run, we are each dead." Isn't this insight akin to the Chinese philosophy? Even though we are each dead in the long run, our intellectual offspring will keep our wisdom alive. In that sense, no discovery is made individually, but always part of the collective wisdom. For many many years, westerners have believed that private ownership in knowledge and individualism is superior. Is it really so? Perhaps it's time for us to re-evaluate this presumption now. There is an interesting Chinese phrase (下海), which literally means "going into the sea". People who used to work in the public sector may find a new job in the private sector. This is so-called "going into the sea". For Chinese, the private sector is like the sea that is full of opportunities and adventures. The public sector is like a safe island that provides security but also low incentives. Enterprising people choose to go into the sea! This option often comes with an "escape clause" that allows those who go into the sea to come back to the island. You just need to pay an annual fee, including insurance, to the old institution to buy that "escape clause". Otherwise, you take care of yourself. You either conquer the sea or drown yourself in the sea. Of course, "going into the sea" is an important event in Chinese reform. In the early 1990's, there was a big wave of "plunging into the business sea". People who work in the public sector were encouraged by the government to go into the sea. For example, my mother was a doctor in a public hospital in Wuhan. In the 1990's she left the position and found a better job in the more developed Guangdong Province. She retained her position in the public hospital by paying an annual fee. Her earnings in Guangdong more than compensated the losses in the forgone position. After 2000, however, "going into the sea" is no longer popular. People realize that public officials enjoy more perks, higher (grey) income and privileges. Chinese people become enthusiastic about taking civil service examinations. Young students dream to work in the public sector even if the starting salary is much lower than similar positions in the private sector. The secret is that the "unofficial" payment far exceed the official salary stipulated in the contract. The business sea no longer looks attractive to young people. Private enterprises can hardly find competent employees compared with their SOE competitors.
This trend will reverse again! The recent anti-corruption movements have largely reduced the benefits and perks in the public sector. The positions in the public sector are not as lucrative as before. In recent news reports, there are some cases suggesting that "going into the sea" will become popular again. For example, in Jiangxi, even university researchers are encouraged to start up new companies and implement their research ideas in practice. We expect a big wave of innovation as more people are willing to "plunge into the business sea". The behavior of the government can change people's incentives greatly. That is China. One of the lessons from studying history is to know that there is no clear division between private ownership and collective ownership. The variation from collective rights to private rights is a continuum.
For example, the harvest might be privately owned, but the stubble might be owned by the community for common grazing. The top of the ground might be privately owned, but the underground water systems and the above airwaves might be owned collectively. Individual management and collective management are two pillars for a society to function normally. I don't see why we have to keep one and abandon the other. It's not clear to us what it really means to "privatize" something. Which part of the system is to be privatized? Without first thinking through these questions, "privatization" is meaningless. It's even more wrong to assume that capitalism is built on private ownership only. In my opinion, this is an important question that is related to how private ownership was eventually established in England.
In Medieval Europe, feudal lords had seigneurial rights (rights to tax the cultivators and collect feudal dues). Village communities had customary cultivation rights. An equilibrium seemed to exist between these two parties for centuries. However, at some point, this equilibrium broke. According to Esther Boserup, "Sometimes the position of the feudal landlords in relation to the cultivators is weakened; they lose their power over all or most of the peasants and they end up as private owners of their home farms only. In other cases, the feudal landlords succeed in their efforts to completely eliminate the customary rights of the cultivators and they end as private owners of all the land over which they had feudal rights, whilst the cultivators have sunk to the status of tenants at-will." These two forms of properties corresponded with two systems of succession: In the areas where landlords' rights were weakened the custom of equal division was strengthened. In the areas where village communities' rights were weakened the privileges of the eldest son were secured (Henry Maine, Lectures on the Early History of Institutions). In France, it seems to be the former case- the feudal landlords' position was weakened and the custom of equal division survived. In England, it was the latter case- the feudal landlords eliminated customary cultivation rights and the privileges of the eldest sons survived. It should be noted that private property rights arose from the English tradition!! We need to think about why from the old equilibrium there emerged two different paths that led to two completely different political regimes. Where did China stand? In China, it seems to be the former case too- the feudal landlords' position was weakened. What role did the Imperial government play in this process? Could Chinese peasant rebellions be understood as the process of securing customary cultivation rights against the feudal landlords? In order to understand Chinese history, we must study European history first. thinking about the patterns about the number of co-authors:
1. The longer the research project, the fewer the co-authors. It's difficult to enforce the commitment to a long project among several co-authors. Long-term research projects resemble long-term partnership. However, in most cases, the commitment to academic projects is not guaranteed by formal contract. It is guaranteed by academic interest and reputation. If one co-author changes his/her research interest and withdraws from the project, it may cause losses to another. Thus, there is no good mechanism to prevent the high risk. If long-term projects do have co-authors, they are likely to be carried out between family members (i.e. brothers, sisters, couples, or father and son.) or mentors and students. The relationship between mentors and students resembles family relationship, preserving some of the characteristics in ancient guilds. That is to say, family relationship can provide binding commitment. An implication is that books have less co-authors than papers. (Collected essays on a topic contributed by multiple authors do not count as written by "co-authors".) 2. The more philosophical the research project, the fewer the co-authors. The more technical the research project, the more the number of co-authors. This trend is clearly reflected in economics. Nowadays, a paper can have 5-6 co-authors who specialize in different things. The first may provide money. The second provides theory. The third gathers data. The fourth provides data analysis. The fifth person who writes the paper may provide reputation.... In the old days, when economics was more philosophical, many papers were written by only one author. Philosophical thinking is an activity that requires lonely contemplation. More co-authors won't improve the quality of philosophical thinking. An implication is that the number of co-authors: applied natural science> theoretical natural science. social sciences>humanities. As economics becomes more and more like hard sciences, the number of co-authors of a paper will increase. A few days ago I began to understand this:
"I have striven not to laugh at human actions, not to weep at them, nor to hate them, but to understand them." "The highest activity a human being can attain is learning for understanding, because to understand is to be free." - Baruch Spinoza One of the difficulties in doing Chinese economic history is the translation of terminologies. Many Chinese terminologies have their corresponding words or phrases in English, I suspect. But it is difficult to find it out. There are two reasons: First, we don't know the exact meaning of those English terminologies. For example, what is exactly the difference between seignory and manor, copyholder and freeholder, villein and serf? Second, we don't know the mechanism of those Chinese institutions, many of which look peculiar. If we don't understand them, how can we find their counterparts in the western world?
Therefore, to study Chinese history, it is also important to study global history and form a comparative perspective. In the past, when Chinese historians only need to present their work to domestic audience, there is was no worry about translation. But our generation of Chinese historians are going global, thus we need to find the common language and have effective discourses with historians in other countries. One of the puzzles in Chinese economic history is the persistence of land redemption norms (典). The seller of land was guaranteed an interminable right of redemption at zero interest. For example, even 50 years after the land was sold, the children of the seller might still require to redeem the land from its current owner. Some scholars attribute this norm as the cause for China's relative decline in preindustrial period, because the unlimited redemption right might prevent landowners from making long-term investment. (Insecure property norms hinder economic growth.) See Taisu Zhang's Property Rights in Land, Agricultural Capitalism, and the Relative Decline of Pre-Industrial China.
Why did this "strange" institution come into play? Was it unique to China? Today I read this sentence from the Old Testament:"The land shall not be sold in perpetuity, for the land is mine. For you are strangers and sojourners with me. And in all the country you possess, you shall allow a redemption of the land." This law imposed restraints on alienation of land. Didn't the Chinese redemption norm impose a similar restraint? What was the economic function of this restraint? That's a difficult question. An interesting paper provides some clue for this question. The paper explains that "Appraisal of the value of a parcel of land in ancient Israel hinged critically on whether the land was held within the family clan or was valued temporarily with redemption at the next Jubilee in mind. A parcel held within the family clan was held in perpetuity, with an explicit expectation that rights to use the land were granted by God and could not be alienated from the family. In this context, the land provided benefits in perpetuity." The key insight in the above sentence is that land was held in the family clan. Tribal rights and individual rights should not be confused with each other. Could it be that redemption right was a tribal right that was inalienable from the tribe? Was there some particular institutional arrangement that helped the current owners from claiming the returns from land investment sunk in the soil? Before carefully examining these questions, we should not make hasty conclusion that the Chinese property norms were "inefficient". If we examine the Chinese norms from the angle of Anglo-saxon private property right norms, we might completely misinterpret them. Be an insider of history, not an outsider. That's a lesson I learnt. Next semester we will be organizing a biweekly dissertation/thesis workshop. The goal of the workshop is to prepare students for their dissertation or thesis. Currently there are about 10 people who are committed to joining the workshop. They are 5-6 fourth-year undergrads who will be completing their thesis in Spring 2014, 3-4 master‘s students who are taking my econ history class and one Ph.D. student. Students are expected to present at least once at the workshop and participate actively in the discussions.
The good thing about having students at different intellectual stages is that the seniors can help the juniors. Sometimes students know more about what they need than instructors do. Seniors can offer good suggestions for juniors. So let's adopt the rule of self-governance in this workshop. My role will be facilitating the discussions as a moderator. If you are interested in joining us, please send me an email at [email protected]. |
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