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Today we return to China, the incandescent heart of global world trade. The Chinese economy has emerged from the mud, blood, & chaos of the 19th and 20th century to become a world-straddling giant. GDP has grown at rates of 5% to 10% (or more) per annum, year after year. Entire giant cities are springing up, seemingly overnight. Roads, airports, canals, and railroads are being rolled out like carpet. The Chinese are magnificent, invincible, beyond the ordinary constraints of destiny! Yet (as you might have noticed) outside of China, there is an international financial crisis going on. One wonders how the Chinese economy, which is still based around selling socks, buckets, and cheap plastic crap goods to everyone in Europe and the United States is coping with the huge declines in demand from those sectors.
But let’s put such a question aside for now. That was all back-up information to the real subject of today’s post: walnuts! Walnuts are edible seeds from trees of the genus Juglans (a word which means “acorn of Jove” to honor the virility and fecundity of the king of the Roman pantheon). Walnuts are interesting plants in all sorts of ways. Both the wood and nuts are commercially important. The trees conduct extensive chemical warfare against other plants. There are dark and captivating myths concerning walnuts in cultures from East Asia to the Mediterranean to North America. However, we will have to address the fascinating botanical aspects of walnut trees in a future post, because right now there are more immediate concerns: a speculative bubble for actual walnuts has formed in China and the nuts have become the focus of intense price inflation.
In China, walnuts have long been a popular plaything. Handling the seeds is thought to increase blood flow, and the wealthy have long regarded walnuts as a status symbol. An article from Reuters (which is apparently a real article rather than a satirical joke) underlines the Chinese affection for walnuts by interviewing an ardent collector and enthusiast:
The bigger, older and more symmetrical, the better, says collector Kou Baojun in Beijing, who owns over 30 pairs of walnuts, most of which are over a century old and have taken on a reddish shine from years of polishing in the palm. “Look how well these have aged. Playing with these kinds of walnuts isn’t for ordinary people,” Kou said.
Like tulips in 17th century Holland, Chinese walnuts (particularly ancient, symmetrical, or large specimens) are trapped in a speculative bubble. Chinese bankers, investors, and speculators have been pouring money into building up light industrial production capacity and driving exports to the rest of the world. As international trade withers, it is unclear how to reallocate all this money. Ordinary Chinese investors have been fleeing the Chinese stock market because of widespread economic uncertainty, flagging exports, and because all-too-familiar shenanigans have made it difficult to invest in equities without being fleeced. As this great river of capital backs up and flows elsewhere, strange markets are created, such as the thriving bubble market for dubious and or mercurial cultural objects like special gourds, esoteric teas, rare tropicl hardwoods, and, yes, walnuts. A pair of particularly fine antique walnuts was recently listed (on a walnut trading site) for a price equivalent to more than $30,000.00.
The Chinese central government is desperately trying to “cool” the economy, but, in the mean time, people see walnuts appreciating in value by 200% and they can not resist the lure of easy money (even if they are literally investing in common nuts which grow on trees). Cynical economists have speculated that the central government does not care about such frothy markets, since the craze for esoteric cultural items is at least not causing rampant inflation in food or energy prices, but those with a historical mindset have to wonder how this bubble is going to pop.
Yesterday Ferrebeekeeper described the Luddite movement, an anti-technology workers’ revolt which occurred near the beginning of the Industrial Revolution. The revolt centered on the idea that labor-saving machines destroy jobs, a concept which economists decry as the “Luddite fallacy.” Most Neoclassical economists believe that, even if machines cause job losses in certain industries, such losses are more than offset by the attendant fall in prices for consumers. The history of the world since the beginning of the industrial revolution has borne this idea out, as more and more goods have become available to wider and wider markets. The history of first world nations reflects a sort of anti-Luddite narrative: farmers are not needed to plough the lands because of greater agricultural productivity so they go to work in factories. Factories then become more productive thanks to machines and cheap competition so the factory workers become tertiary sector employees. The tertiary sector consists of service jobs where employees do not necessarily make or produce anything tangible but instead offer support, experience, or knowledge—for example nurses, lawyers, waste-disposal professionals, casino employees, courtesans, financiers and such like (some economists posit that there is a quaternary sector of scientists, professors, computer geniuses, artists, and bloggers—the creative sector—but we needn’t get into that here).
Since the dawn of the Industrial era, this progression has worked admirably for creating economic progress. And, during that time, machines have been constantly improving. Whereas the horseless carriage once put horses, hostlers, and livery stables out of work but provided automakers with jobs, then robot arms and mechanized welding units came along to supplant those auto-workers. The displaced autoworkers all had to go out and become radiologists, actuaries, sex-workers, and restaurateurs. Now, however, machines are becoming sophisticated enough to invade the tertiary sector. Subtle computer programs are proving superior to trained (overworked) radiologists at finding the tiniest nascent tumors. Accountants are being replaced by Turbo-tax and Quickbooks. Weird Japanese scientists have built robots which…um make sushi and pour drinks. It seems like this trend is going to gobble up a great many service jobs in the near future from all strata of society.
A world where machines are able to replace white-collar workers would mean the hollowing out of the middle class. The international corporations and plutocrats making software, robots, and automated factories would become extravagantly rich while the rest of would have to struggle to find niches the machines haven’t taken over. A huge economic slump would grip the developed world–as average consumers became unable to buy the goods turned out by those factories. Hmm, that seems awfully familiar.
So are the Luddites finally correct? Should we go out and smash our computers and Roombas? Well… it isn’t like we can stop what we are doing. To move forward in science and manufacturing we are going to need better thinking machines. At some point these machines will be better at thinking then we are…and they will also be better than us at making machines. That point will be the technological singularity and it seems that we are on that path, unable to turn back. Perhaps we will end up with a race of omniscient omnipotent servants (yay!). Perhaps we will combine with machines and become mighty cyborgs. Perhaps we will end up as housepets or as a mountain of skulls the robots walk on and laugh at. I don’t know. Nobody does. Yikes! How did this essay about a nineteenth century protest movement take us to this destination?
In the mean time, it would be useful if people would talk more about what we want from our technology and how we can get there. The fact that having better machines is currently splitting society into some dysfunctional Edwardian plutocracy is disquieting. It means we are not thinking hard enough or using our imaginations. We should start doing so now…while we are still allowed to!