Mr Karlgaard's conclusion for China is:
- "it seems to me that 99.99% of Chinese wake up each day with a core belief: Anything not expressly permitted is not permitted at all."
(edited to add: if Chinese people had been behaving as Mr Karlgaard has alleged, China would have been developed in parallel to Japan for the past 150 years)
Unfortunately, Mr Karlgaard confused observing rule with observing authority. What he has observed was blind obedience to authority (i.e. one's superior) and lack of empowerment, not blind obedience to rules and laws.
For your entertainment below:
China's Mental Default
On a recent trip to China (to host a FORBES cruise for Investors), it didn't take long to catch a whiff of the fact that all is not perfect in the Middle Kingdom. During the bus ride from Beijing airport to the Shangri-La Hotel, the tour guide kept mentioning housing prices. These were soaring, "unlike in the days of Mao," she kept telling us, "when the government provided for housing." The guide linked the dead dictator's name with free housing a half-dozen times. There it was: Mao nostalgia.
She also fed us bad chop suey regarding the U.S. dollar. "The street vendors don't take dollars anymore," she said. "You must change dollars to yuan." This turned out to be laughably untrue. Tiananmen Square was crammed with vendors who gladly took U.S. dollars. They pushed, elbowed and practically knocked down your children to get to your U.S. dollars. I bought two Mao watches for $15. Each ceased working about an hour after the purchase, just like Mao's economy.
Now, I don't doubt for a minute that China's spectacular 9%-to-10% economic growth rate will continue for many more years. You can bet on it. The Chinese economy is like a huge rubber band: At one end is the economy that can turn out Apple (nasdaq: AAPL - news - people ) iPods to perfection; at the other end are all those sad, sunburned fellows with bad teeth and Mao hats--refugees from rural China--who stand by the roadside with shovels. You see scores to hundreds of them at every construction site. They stand around smoking cigarettes and occasionally haul a load of dirt from here to there. Prison work gangs are more productive. Which is why the Apple iPod economy will snap the shovel economy forward. This is guaranteed.
What's not a slam dunk are changes in the average Chinese person's attitude. For every Chinese entrepreneur like Alibaba's Jack Ma (check him out on Wikipedia), there must be 10,000 who fear sticking out, bucking authority or going off-script. You see this everywhere. One afternoon at the Shangri-La, my wife, kids and I decided to abort a long elevator wait and take the stairs. Up we trudged to the 13th floor--they have 13th floors in China--but on the 12th we were met by a startled hotel employee. He nearly passed a brick seeing us on the stairway. He shouted for us to walk back down.
"Just one more floor," we begged. "Down! Down!" he shouted.
Another anecdote among several: One night the hotel left a complimentary bottle of wine in our room. We took it to dinner in a hotel restaurant. This confused the waitstaff no end. Four or five of them consulted frantically. Finally, their leader stepped forward to say that bringing the bottle of wine was "not permitted!"
"But it's a gift from the hotel," we protested.
"Not permitted," repeated the waiter. He wasn't angry. He wanted to do the right thing, but he was afraid. You could see it in his eyes.
Perhaps my Western eyes see this unfairly, but it seems to me that 99.99% of Chinese wake up each day with a core belief: Anything not expressly permitted is not permitted at all.
But that's most of life: Not permitted! Ask yourself: How far can China really go if "not permitted" is the default mental mindset of the country's vast majority?
Maybe this won't be a key question during the next 10 years. China has so much catching up to do it can easily grow 10% a year for another decade. Crunch time, I think, will come in the 10- to 20-year time frame. Unless attitudes change, that's when the "not permitted" mental default will begin to slow China's incredible march forward.
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