Sadly, even adding up the math of these apartments makes that seem unlikely. I’ve always understood that the rule of thumb for rent is that monthly rent=the value of the space paid over ten years, give or take. Current rental prices and prices per square meter would take eighty years or more to reconcile, according to rough math done while talking with friends. Such a gap needs to be fixed, but one method seems unlikely (rentx8) while the other seems disastrous (home prices dropping 7/8ths).

I hope I’m wrong. The Chinese certainly have more control over home prices than we do, which might prove the solution.

There is a disturbing similarity to the current state of China’s real estate market and that of the USA five years ago. Two examples have clarified this for me. The first is the example of a Chinese friend who bought a home five years ago, for one million yuan, who now gets frequent calls from real estate agents offering 4-5 million. He refuses to sell, even with the opportunity of pocketing the difference as profit. The second is a particularly telling account: two western friends who live in a fairly high-end apartment, who pay approaching western prices in rent. Recently, without any warning, they were told to move, as “someone had bought the apartment.” This without any visits by the new owners, which is very unusual for a country in which one is loathe to buy even an extension cord without testing it first, with multiple devices.

This leads to two, equally disturbing possibilities: the first, that someone bought this apartment without looking at it, as a purely speculative decision. If lots of investors are being this willing to foolishly ‘buy high,’ once the market turns (and it will turn) they will all run screaming for the doors at once, leading to a crisis the government might not be able to stop. Despite all of its power, the central authorities could not force tens of thousands of people purchase homes at prices FAR over their market value, which would be necessary if the market experienced a decline like America’s.

The second disturbing possibility is that the owners of the building decided to kick my friends out of their apartment for the express goal of realizing appreciation gains due to the real estate bubble. When a country starts to decide that the value of something on the books is worth more than cash flow, it is setting itself up for a crash. It is similar to purchasers of AAA-rated bonds underpinned by subprime loans: the value of the bonds was something only on paper, without any actual cashflow to back it up. The people who made the initial sub-prime loans are just like the owners of this Chinese building: so eager to have something valuable in their balance sheets that they will ignore or even actually discard their sources of real revenue.

On the other hand, of course, the Chinese are skittish of large changes, due to the radical experiments of the last century. So, you have a monolithic nation, afraid of change but on the other hand extremely used to it. An interesting dialectic.

I’ve also, as I’ve grown up, been immeasurably unimpressed with large corporate copyright holders, especially in the music and entertainment industry. I am one of the kids who has grown up with music being something that can exist anywhere, and is not a ‘thing,’ but instead more of creature… something that, once turned loose, grows, develops, and multiplies. It is not a disk, or a cassette, or a performance, it is a file. And, as I see people of my generation, who did something every other person between the ages of 10 and 30 in the USA has done, prosecuted for millions, I lose all sympathy with the rights holders. Only half of the previous demo will admit to file sharing, but that’s because the other 50% doesn’t realize that the RIAA would sue them for half a million dollars for the time they sent that song to their friend in middle school.

I now have reason to moderate my opinion in that respect. The encyclopedia I spent a year and a half on was offered for free, electronically, online. This pisses me off. It’s not their work, they don’t have the right to do what they do. It makes me almost quake in anger, but I’m sure from their standpoint, they are doing the same thing I did when I (hypothetically, don’t sue me RIAA) took an album from a friend’s shared iTunes (also hypothetically, after listening to the hypothetical album, I bought the hypothetical new album on iTunes).

So, today, I find myself torn. I still don’t feel sad for the huge music industry figures, but, honestly, if I didn’t know Berkshire was just a small office in the Berkshire hills, I might have been willing to pirate our encyclopedias just by looking at our perfectly modern and up-to-date website. The justification, internally, is simple. A low risk, high reward crime against people you neither know nor suspect you’d like. Perhaps its time for me to get to know some of the people who work in the music industry…

Buy books!

A cash economy is a mysterious thing, and I don’t know if there have been any direct studies to see how it effects resource usage. I have read that the single most effective method of encouraging efficient driving is to mount a meter on the dashboard constantly letting you know your MPG, and the Chinese system is certainly similar. I am certainly using less electricity today than I did yesterday, slightly more compulsively turning off lights, unplugging the DVD player, and waiting until things start getting real cold before turning on the electric heater.

Hooray, thought I. China has finally unblocked Youtube, and I’ll be able to rejoin the normal internet community of the world.. Alas, it was not to be. Youtube is as firmly blocked again as it ever was, and my hopes, small as they were, are crushed.

Pausing, looking at the caviar (from a $25 buffet!) smeared into my tablecloth, bubbling pots of southern Chinese soups, twenty desserts, a full salad and sushi bar, fresh baked italian bread of at least 6-7 types… and I muttered out loud:

“The United States Dollar: Backed by the full Faith and Credit of the People’s Republic of China.”

We all shrugged, and kept eating.

My personal suspicion is somewhat different, however. Americans function in a world of independence, born on the cult of the individual which rules so many aspects of policy and society even today. The Chinese do not have this luxury, existing in webs of social responsibility vastly larger than we can imagine. A single twenty five year old professional these days is responsible for the upkeep of up to six people: four grandparents, two parents, all of whom might still be alive when the young person considers having his own children. The net (ironically enough) has no such webs, and so the distinction of who one is online with who one is in the real world (or IRL, for the real gen-Y’ers) may be greater, and require a stronger word… one for which there is no great translation into English, beyond netizen.

Yet another way in which China is more capitalistic than the USA.