The Deadly Destruction of "Taking Advantage"

On July 11, 2007, the New York Times reported

"BEIJING, July 10 - China executed its former top food and drug regulator on Tuesday for taking bribes to approve untested medicine, as the Beijing leadership scrambled to show that it was serious about improving the safety of Chinese products."

In 2008, Chinese manufacturers deliberately added melamine to their baby formula.  This dangerous industrial chemical made the milk seem to have more protein when tested, but six babies were killed and 300,000 were sickened.   When parents learned of the problem and shunned Chinese-made infant formula, the price of foreign-made formula tripled and the government came down on the foreign companies for price gouging.

An unofficial investigation in March 2010 suggested that 1 in 10 Chinese meals were cooked with recycled cooking oil, often salvaged from restaurant drains.

"It's foolish not to take advantage."

I've a friend who's done considerable business in China.  On one of his flights from Taipei to Hong Kong, his seat-mate was a Chinese businessman who illustrated the ancient principle "in vino, veritas."

After downing several drinks, the man told my friend, over and over, that in China, "It's foolish not to take advantage."  After a few more drinks, the story unfolded that he was a contractor who'd bribed inspectors to sign off on his buildings which didn't meet building codes.  The better his relationships with the inspectors, the lower his costs and the more money he could make.

My friend's story has the ring of truth.  NPR reported:

Since the earthquake on May 12, 2008, parents who have demanded accountability for the deaths of their children have been punished for it - threatened, harassed, beaten and detained by local authorities.

NPR told us that many school buildings had collapsed unexpectedly.  Parents who pressed authorities for investigations of the shoddy construction practices that had killed their children were harassed and sometimes beaten or jailed.

Complex Societies, More Opportunities

Over the past 40 years, China has gone from a completely agricultural society where most people lived in the country to an industrialized urban nation.

In an old-style farming community, most products don't travel far from their point of production.  If you buy vegetables from a farmer, you know who he is and can confront him if they turn out to be unsatisfactory.  Taking advantage is difficult in small towns where everybody knows everyone else.

As the Chinese economy has grown, supply chains are longer, and it's harder to track bad products back to whomever made them.  Chinese food protection laws and building codes are similar to ours, but bribery and connections mean that the rules aren't always followed.

The temptation to "take advantage" is all too human and is found at all levels of society.  In "Revenge of the Mistresses," the New York Times discussed a Washington Post story which told about a Chinese woman named Ji who discovered that her boyfriend had been married all the time he'd been with her:

In recent weeks, Ji has released hundreds of photos on line that offer a rare window into the life of a Chinese central government official who - despite his modest salary - was apparently able to lavish his mistress with luxury cars, go on shopping sprees at Prada and tuck more than $1,000 in cash into Ji's purse every day when they first met.

The Post reported that her boyfriend was Fan Yue, a deputy director at the State Administration of Archives.  Fan claimed he hadn't spent nearly as much money on Ji as she'd said.  It was far less than $1.7 million but more than $500,000.

As one commentator put it, "Looks like the Ji has hit the Fan." but it didn't, not really.   Despite all the publicity, nothing happened to Mr. Fan despite his suspicious wealth.

The Times wanted to know:

This guy is a senior bureaucrat in the state archives.  What sort of illicit activity was he up to in the file rooms to earn that kind of cash?  Every government has corruption, including ours. ...

The question "What sort of illicit activity..." is rhetorical.  We know how Mr. Fan got the money - he exploited opportunities to finagle the records.  There's no way the man in charge of filing government papers away and retrieving when when they're needed can earn $500,000 honestly.  On the other hand, in a bureaucracy-ridden society like ours, profitable opportunities for creating forged documents or hiding real documents can only be imagined.

We Do It Too

Mr. Fan got his money was the same way Caroline Kennedy got appointed Ambassador to Japan:

In naming Ms. Kennedy, whose nomination has been rumored for months, Mr. Obama is keeping with a well-established tradition of rewarding important campaign supporters with plum embassies. He recently put forward big-dollar fund-raisers to be envoys in London, Berlin, Copenhagen and Madrid.

... Ms. Kennedy, 55, a lawyer and an author who has served as director of numerous nonprofit organizations, has never worked in government and has no special expertise in Japan.

This is how Chelsea Clinton became a board member of the School of American Ballet, the same way an Obama bundler got a half-billion government dollars to invest in a failing solar energy enterprise, and the same way a Syracuse shopping center owner got a new highway interchange near his mall just before he contributed $100,000 to Bill Clinton's foundation..

Corruption in China seems to be worse and a whole lot more deadly than in America, but America is catching up.  I remember buying bottles of aspirin, unscrewing the caps, and taking out pills.  Then someone put poison in bottles on drugstore shelves and killed several strangers.  Now we struggle with sealed bottles and other containers which cost more than the old-style caps.  We used to be able to buy individual batteries and other small items; now they come sealed in plastic packages that are very hard to open to make it harder to steal them.  As always, we consumers pay for the higher costs of theft-resistant or tamper-resistant goods.

Voting with their Feet

Chinese corruption and government-sponsored theft is so common that many businessmen are saying they want to earn enough money to get out.  They're losing confidence in the Chinese economic model and don't want to be around when the Ji hits the Fan.

The Wall Street Journal reports that more Americans are giving up American citizenship than ever before.  Have they lost faith in the American economic model?

No complex economy can survive on the basis of "It's foolish not to take advantage."  We're all so dependent on other people to keep the electricity flowing, the sewers running, the water clean, the roads paved, that it's not possible to personally inspect every single important piece of work that affects us. Too much "taking advantage"  kills people and will bring down any economy.

Both America and China have the problem Confucius pointed out long ago - there's no limit to government greed or to the greed of businesses who partner with government employees to steal our money. As governments grow more and more corrupt, citizens become more corrupt.  Eventually, the economy can no longer function and seizes up.

Is that where we're headed?