Afternoon roundup

A closing of some of the browser tabs:

• Eli Dourado on NEPA - America's equivalent to the RMA. Superb seeming primer on how it all works, though I would not be one to notice any holes in it. 
• Road-building is going to get harder, thanks to a court interpretation around water consenting. Minor bits of drainage are going to hit large hurdles. 
• Chris Snowdon in conversation with Marewa Glover on New Zealand's tobacco and vaping regime. 
• Possibly the best approach for "glue ourselves to things" protestors: leave them there.
• Lindsay Mitchell picks up another aspect of the Perry child poverty report: substantial differences across regions in foodbank uptake, sorted by material deprivation. 
• "Rather than address the workforce crisis it inherited, Labour instead resorted to restructuring the health system to put it under greater central government control and make it more vertical. This was a fatal error." 
• NPR's Darian Woods and Wailin Wong on America's blocking Chinese access to higher-tech chips.
• Government may be preferring government-built housing in easing RM constraints. That, as a pattern, will make it harder to get necessary RM reform - if govt can exempt itself from the worst effects of bad RM rules...
• Older piece now, but I want to be able to find it again. Cato's critique of the US Jones Act, which prohibits foreign shippers from transporting goods between US ports. NZ shippers often want this kind of rule here too. It's been doing particular harm in Puerto Rico lately. 
• Sex work legalisation in NZ included measured aimed at protecting temporary migrants from exploitation; those rules may be doing more harm than good.
• Youth justice facilities overwhelmed by numbers.
• Emergency rooms overwhelmed by numbers and want of staff.
• Mental health system overwhelmed by numbers and want of staff.
• One reason the new Rings of Power series may not be as faithful to The Silmarillion's account as it could be: copyright. 
• Wellington: for, by, and of connected insiders. 
• MBIE is running a review of space policy. Wish there were a one-click submission option "Just leave it alone and don't break things." There are just so many submission processes on...
• Yet another area in which NZ could do well by simply recognising standards in use in other places. This time, car safety. 
• It looks like the prescription guidelines for medicines for ADHD have been designed around avoiding Ritalin flowing out into other uses rather than helping patients. And the one doctor who prescribed in accordance to patient needs rather than guidelines is in trouble for it. 

Afternoon roundup

An overdue closing of the browser tabs brings these worthies:

• Justin Giovannetti on New Zealand diplomacy and China.


• The New Zealand Principals Federation suggests merging the teacher colleges into the universities might have something to do with declining teacher competence. I was on faculty at Canterbury when the College of Education merged in in 2006. It never made much sense to me on academic grounds. Teacher training was vocational training. Experts in vocational training, of the kind provided at a College of Education, are not necessarily great fits at a university where research expectations matter more than teaching ability. It seemed likely to result in great teacher trainers being exited in favour of those able to get papers into low-grade education journals.


• A Wellington taxicab cartel? The Commerce Commission alleges they were trying to set minimum prices for fares from Wellington airport. I'm still glad I can just grab an Uber to avoid such rorts.


• New Zealand now has a trade union whose purpose is to defend the free-speech rights of those whose outside-of-work statements get them in trouble with their employers.


• It looks like the government will be using procurement rules to try to favour Māori-owned businesses. There's some evidence that these kinds of rules, in the US, increase black business ownership rates while also increasing government contracting costs by something on the order of 3.8% or 5.6% on those contracts.

Film subsidies are stupid, a continuing series

So. 

The New Zealand government, committed to wellbeing, believing that tax is love, wanting to ensure that every loving tax dollar spent provides the greatest possible increase in wellbeing, and fronting the Christchurch Call to stop harmful speech, has put $243,000 towards a Chinese propaganda film with the tagline "Anyone who offends China, no matter how remote, must be exterminated."

Thomas Coughlin has the story over at Stuff:

The film was not made directly by the Chinese Government, but by a slew of Chinese state-owned enterprises, including the China Film Group Corporation, China's largest film producer, and Bona Films.

Bona Films is a subsidiary of China Poly Group, another state-owned enterprise. China Poly Group is an unusual conglomerate housing the world's third largest art auction house and a real estate business, and has "longstanding ties to the military and the family of the former Chinese leader Deng Xiaoping," according to The New York Times.

The strong allegations made against the Chinese film industry's activities in New Zealand are made in forthcoming research from China expert Professor Anne-Marie Brady.

In it, she says growing cooperation between the Chinese and New Zealand film industries, combined with New Zealand's screen production grant means "taxpayers are now subsidising China's propaganda films".

Her concerns aren't just confined to Chinese films — she said the growing ties could have a chilling effect on New Zealand's own cinematic output. 

I don't know quite how you get around this if you're going to have an international film subsidy regime.

Like, maybe you could imagine some vetting to make sure we're not subsidising the production of propaganda films (dammit, I always misspell this and have to go back and correct, and I blame these guys) for authoritarian governments. But can you imagine the diplomatic mess where an arm of the NZ government tells film companies linked to the Chinese military and linked to the high echelons of the Chinese Communist Party folks that the NZ government considers their film to be authoritarian propaganda?

Not having international film subsidies would be a pretty clean way of not having to make those kinds of calls.

And, as reminder, the arguments for the subsidies are largely bunk.

You'll most frequently hear the argument that the subsidy is just a rebate on taxes paid here on activity that otherwise wouldn't have occurred here, so it's costless.

But that's wrong in general equilibrium. In the absence of film subsidies there would be fewer films made here, but people would work in other industries instead. Industries that do not get a tax subsidy. Those other industries are smaller than they otherwise would be because resources have been competed away by the subsidised industry. The subsidy won't increase total employment, it'll rather shift the kinds of tasks that are undertaken here as compared to abroad.

The more sophisticated argument is that the artificially-large film sector makes it cheaper and more feasible to produce NZ content here. International film subsidies have brought production that's built facilities and expanded capabilities, so it's then easier for NZ On Screen to get actual New Zealand work produced.

And that's certainly true. But we have to ask about value for money. International film subsidies cost on the order of $100 per household per year - or at least that's what it worked out to when I'd looked at the budgeted spend for 2020 earlier this year. Add in additional cost for training subsidies to work in that industry to keep it at that scale. And think about what other valuable services all the smart folks working in that industry, because of subsidies, could have been providing elsewhere if they hadn't been pulled into film work because of the subsidy regime.

Is it really plausible that the typical household, if offered the chance to decide, would really want $100 from their annual tax bill going to pay for international film production here rather than being shifted to health, to education, to Pharmac, or to themselves in lower taxes?

2020's budgeted international film subsidies are $171.6 million. Pharmac's budget is around a billion per year. You could then increase Pharmac's budget by around 17% if you stopped paying international film companies to make movies here instead of elsewhere, and put the money instead into Pharmac.

Is it plausible that whatever benefits are generated by international film subsidies, including that it makes it easier to produce great stuff like Wellington Paranormal and Hunt for the Wilderpeople, are higher than what we'd get by giving the money instead to Pharmac?

As for the argument that we have to keep subsidising the film industry because so many people now work in that industry... my column in our Insights newsletter earlier this year:

We all know that best policy is not paying off the kidnappers. Countries that get in the habit of paying the kidnappers encourage the taking of more of their nationals as hostages. It’s a dangerous game to get into because it’s so hard to stop.

But would any country be so daft as to not only pay the kidnappers, but also deliver to them the next round of hostages as part of the bargain?

If you think no country would be so mad, think again. It’s how the film subsidy regime in New Zealand works – as it does in every other place that chooses to play the game.

Last September, The Herald’s Matt Nippert reported that the Labour-led government had decided to continue the previous National government’s film subsidy scheme. Minister Parker ruled out changes where thousands of jobs could be at risk because business viability was threatened by ending subsidies, and where commitments by the National government risked lawsuits if the subsidies ended.

So there are your hostages: thousands of workers in the film industry who would have to shift to other employment, or shift offshore, if the subsidies ended. And here’s the payment to the kidnappers: the budget estimated that New Zealand will spend $113.6 million on screen production grants targeting international productions this year, with $171.6 million budgeted for 2020 – or about $100 per household.

Meanwhile, a host of New Zealand government-funded polytechs and universities train students towards diplomas and bachelors in screen production, diplomas in on-screen acting, bachelors of design (stage and screen), certificates in applied filmmaking and television, and more.

The government is subsidising specialised training students for jobs in an industry that would shrink dramatically in the absence of further subsidies to that industry, and further subsidies to that industry are justified on the basis of the jobs that would be put at risk if the subsidies ever ended.

To put it plainly, the government is teeing up the next round of hostages.

Had governments been this smart in the early 1900s, subsidies for training in the fine art of making buggy-whips would have been accompanied with bans on cars to protect the jobs of the whip-makers.

To crib a line from an excellent ’80s Cold War film, the only winning move in the international film subsidy game is not to play.

Afternoon roundup, and around the traps

The worthies on the closing of the browser tabs.

• Nice comparison of vacant housing to transitional unemployment, in an American context. Filing this one away here for the next time somebody notices a few empty houses and decides that policy should do something about it. It comes up too often. 
• Susan Edmunds over at Stuff looks at household income distributions; the piece includes a short bit from me on AHC- and BHC- incomes. 
• Universities need to lift their darned game. 
• AUT not only caved at the last minute to pressure from the Chinese Embassy to pull the rooms booked for a memorial event for the Tienanmen Massacre, they also (and I just cannot stress enough how stupid this is) failed to redact the name of the lecturer who had booked the rooms when the documents were released under OIA. I hope that lecturer does not have family living under the Communist dictatorship. Utter muppetry. Newsroom's since blanked out the name but what the hell. 
• International students at Auckland University from China cannot be expected to feel safe there unless the University takes a stronger stand in support of their international students - and especially when the Chinese embassy is lauding the pro-Communist student who shoved the student who was supporting the protesters in Hong Kong. 
• I dunno what the answer is here. Stronger emphasis on freedom of speech in international student orientation events and policies expelling students who become violent in debate with other students could be part of it. But universities are massively dependent on foreign students, disproportionately from China. Capped domestic tuition fees have the universities seek money where they can - from full-fees paying foreign students. The government has to cap tuition fee increases because students don't really pay them - the government does. The first year's free, the rest is funded by loans that are marked down by about 45% the second they're issued. Every tuition fee increase increases the government's liability through the student loan portfolio. So you get this self-reinforcing mess that the government cannot afford to cover the education costs for the volume of students it wants to go through the universities and is unwilling to have students pay their own way a bit more, so pushes the universities to get international students to cover the bill. That builds in vulnerabilities when stuff like this happens. 
• If you wanted to build a house out of straw bales and eco-friendly materials, good luck getting it signed off and consented. "Oh, the market fails to provide eco-friendly alternatives!" Yeah, well, if the government won't sign off on the standards, then you get messes. 
• Elsevier is expensive; the UC libraries no longer subscribe to them. So the excellent Ted Bergstrom is organising volunteers to put together running tables of contents of those journals with links through to faculty website copies of the final edited versions of their own papers. Superb.
• I don't get why the Reserve Bank wants to ban anyone who knows monetary and macroeconomics from serving on the monetary policy committee, but that looks to be what they're doing. It's hard to come up with good explanations. The piece at Interest has some minor comment from me.
• Running field experiments? Watch out for this: the presence of the foreigner as experimenter changes behaviour.
• Google might yet build itself a city development in Toronto. It looks pretty neat. 
• I also give a couple warnings about a 'virtual shopping' study finding that people in a fake supermarket are responsive to sugar taxes. In the real world, people stock up when things are on special, and buy less when it isn't, so short-term price responsiveness isn't the same thing as long term consumption changes. 
• A mammoth listening task: Jordan Hoffman ranks 180 Rush songs. The ranking is very defensible, though I'd have moved Dreamline and Time Stand Still up the list a bit and pushed Working Man down the list. Almost all of the songs are on Spotify; here's a playlist, from lowest to highest ranked. And Hoffman is absolutely correct in his top pick (again: 1 here is the lowest-ranked. You work your way up). UPDATE: It looks like the embedded playlist can only run the lowest-ranked 100; click through to the web player to get the full list.
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Afternoon roundup

Posting has been light as other deadlines press. But I have accumulated too many browser tabs. Here are some worthies:

• Colby Cosh on the case for using prices to reduce carbon emissions. 

  Is there really absolutely nothing you can do, even if you’re quite lower-middle-class, to create energy savings in your life? You never go to the fried chicken place across town instead of the one on the next block? Are you sure you need to own a pickup for one home reno project or a bit of landscaping every three years? Have you even looked into smart thermostats or checked your window seals? Invested in a Snuggie? Taken the old incandescent Christmas lights off the hot tub?
  
  The real problem is that you can’t ask these questions — even hypothetically, or even just to point out that every single household might ask hundreds of them — without sounding like an obnoxious schoolmaster. A carbon tax is social engineering — it is just an optimum, consciously designed, maximally market-friendly way of going about it. Any economist will add the implied caveat that all taxes are social engineering, and other taxes are engineering society in dumb or bad ways. A “carbon tax” is meant, for better or worse, to discourage the emission of free carbon. “Income tax,” which discourages honest work, starts to look pretty ridiculous when you follow the logic just a few inches further. But those are always the hardest inches to cross in the face of a policy novelty.



• Pattrick Smellie reminds us how New Zealand's ban on Taranaki oil exploration can wind up increasing emissions globally:

  The oil and gas ban is proving to be a two-edged sword politically, particularly since no matter how often Woods denies it, the evidence is strong that the ban is more likely to increase than decrease global emissions of greenhouse gases.
  
  Especially questionable has been her claim that the vast quantities of methanol currently made from natural gas in New Zealand won't end up being produced in China, using higher-emitting coal because of China's emissions trading scheme.
  
  As climate change policy expert Christina Hood told the Environmental Defence Society's recent business and climate change conference in Auckland, the Chinese ETS is not really an ETS yet and currently only applies to the electricity sector.

  Our submission on the ban is here.


• Former NZ Ambassador to Beijing John McKinnon's speech on New Zealand's relationship with China is excellent. Recommended reading.

  China is also now, what is was only potentially in 1972, a great power. The fabric of international society is woven by the ability of the international rule of law to constrain the interests of large powers such as China. This means that New Zealand, as a country which invests in and benefits from the international rule of law, has expectations of China, as it does of other great powers. That they will comport themselves appropriately, especially towards those who have less power than themselves. That is the true mark of greatness. It is pleasing to see how China has responded to these expectations, such as through its policies on climate change, and its championing of the multilateral trading system. New Zealand, along with many other countries, will be represented at China’s international import expo, to be held in Shanghai in November, and marking the 40th anniversary of reform and opening up. There are many areas where New Zealand welcomes China’s voice and can and does work with it in international forums.



• Susan St John is entirely correct about the need to better sort out residence issues with NZ Superannuation. The government is currently considering legislation that would require people to be resident longer in New Zealand to have access to the New Zealand Superannuation scheme. St John reminds us that we also need better treatment of the private retirement plans of those who bring their 401(k) with them to New Zealand.


• New Zealand's copyright industry is trying on a push for extending the duration of copyright and messing with our current ISP notification regime for infringement; I don't wish them luck.


• Net migration has slowed. This shouldn't be surprising. Migrants are only somewhat sticky; a lot of them leave a few years after arriving. That means that net migration figures will always look stronger than they should during upswings in inbound numbers, and weaker than they should during downturns in inbound numbers. Current year net migration is a function of current year inflows and lagged departures from prior year inflows. Net migration was always going to flatten off unless inbound figures continued to grow. As soon as inbound figures level off, then the outflows from prior year waves catch up. I'd be surprised if the anti-migrant tone of the last election campaign, combined with increased restrictions on those here without a residence visa (can't buy a house), hadn't amplified this.


• Some folks are complaining that Christchurch might have 'too many' houses now. What a terrible problem to have! We should be thanking Selwyn and Waimakiriri for allowing growth and solving Christchurch's post-quake housing crisis. And for those who don't like the sprawling suburbs - perhaps the Crown could consider selling off some of its downtown land holdings using a descending bid auction to find out what the value of that land really is. It's felt like unwillingness to realise losses against inflated downtown land values has been a hold-up there, but I'm not close enough to it to really know.

Chinese data

Everybody knows there are problems in Chinese official statistics. But John Gibson and Chao Li have found what I think is a new one. Anything that's using regional per capita figures is a bit suspect.

Here's their abstract:

Hundreds of studies in economics misinterpret China’s sub-national population and per capita data. The most widely used population counts are of hukou registrations from each province, prefecture, county, or city rather than of the people living in each place and generating local GDP. Over 220 million people have left their place of registration, while almost none had when reforms began, creating time-varying errors in estimates of per capita income of sub-national units. We survey empirical articles in blue ribbon journals, in development journals, and in regional and urban economics journals that use China’s sub-national data. Over 80 percent of articles use these data erroneously; most commonly the wrong population or employment counts are used to measure the size of sub-national units, and per capita data are calculated with the wrong denominator for the interpretation placed on variables. We provide examples of errors from each group of journals, and a critical test of one highly-cited study. Specifically, we show that if hukou registrations are erroneously used to measure the local population, following existing practice, conclusions about driving forces for urban area expansion are reversed. We give recommendations for more careful use of China’s sub-national population and per capita data.

Time varying errors are... not good. They don't wash out in fixed effects.

Careful out there...

Happiness and process

The Economist notes that rising incomes in China in the last two decades haven't increased measured happiness as much as we might have hoped. Why?

“It is a mistake to think that rising income gaps are the main or even a primary source of popular discontent in China,” Mr Whyte says. It is, he adds, procedural injustices, abuses of power and the lack of recourse that make people angry enough to take to the streets.

Most migrant workers know first-hand what Mr Whyte is talking about. Lei Pengcai, 61, moved to Beijing last year from a small town in Hunan province and took work washing the dishes in a restaurant. His monthly wage is 1,400 yuan ($220), most of which he sends back home to his wife and family. Moving to Beijing has opened his eyes to the kind of wealth that some enjoy, but he sees income disparity as a fact of life. “I haven’t been, but isn’t there great inequality in America and England too?” he asks.

Mr Lei declares himself pleased with the past decade’s reduction in rural taxation; not too bothered by moderately rising prices of goods; and somewhat concerned that, although his basic health care is adequate, his coverage would not suffice if he were to suffer a severe illness or injury. But he is clear on the one thing that does make him unhappy: official corruption. In his hometown, official posts are handed out to friends or bought and sold. Once installed, he laments, officials can grab land, charge fines, and demand bribes under threat of closing down a business. They do whatever they want, he says, and the people cannot stop them.

Fairness matters. And, it's revealed more in process than in outcomes.

Me-utilitarianism: restaurant edition

If this story's right, the country now has a couple hundred fresh-off-the-boat Chinese chefs who haven't yet learned to adapt their offerings for the Kiwi palette.

Where are they? I want the list of restaurants! There are excellent Chinese restaurants in NZ (and Asian restaurants more generally), but if any foodies have heard anything about particularly good new chefs having turned up in Christchurch, I'd love to hear about it.

The National Distribution Union's upset about the whole thing, and especially by that some chefs might be taking salary offers including room and board that have cash components less than minimum wage.

I'm upset that we don't have a free trade agreement with Ethiopia bringing in a few dozen good Ethiopean chefs.

Affirmative action

A Chinese IT outsourcing company that has started hiring new U.S. computer science graduates to work in Shanghai requires prospective job candidates to demonstrate an IQ of 125 or above on a test it administers to sort out job applicants.

In doing so, Bleum Inc. is following a hiring practice it applies to college recruits in China. But a new Chinese college graduate must score an IQ of 140 on the company's test.

An IQ test is the first screen for any U.S. or Chinese applicant.

The lower IQ threshold for new U.S. graduates reflects the fact that the pool of U.S. talent available to the company is smaller than the pool of Chinese talent, Bleum said.

...

Moreover, unlike many of the larger IT offshore development companies, Bleum is focused on long-term engagements with its clients, not on one-time projects. Over time, it hopes to hire 100 to 500 U.S. workers to help support North American customers.

So says Computerworld, HT Slashdot. [Note the piece is a year old now]

So, is it differential thresholds for the Americans because they bring complementary skills that are relatively scarce in China? Or are they being hired for entirely different positions in tech support while the Chinese workers handle the harder programming problems? Tough to tell from the article.

Constructing history at the museum

Where new Chinese museums suppress recent failings [1/20], American ones almost require the visitor to wear sackcloth and ashes [2/20].

At the elaborately renovated National Museum of China in Tiananmen Square, visitors interested in the recent history of the world’s fastest rising power can gaze at the cowboy hat that Deng Xiaoping once wore when he visited the United States, or admire the bullhorn that President Hu Jintao used to exhort people to overcome hardship after the Sichuan earthquake in 2008.

But if their interests run to the Cultural Revolution that tore the country apart from 1966 to 1976 and resulted in millions of deaths, they will have to search a back corner of the two-million-square-foot museum, which will complete its opening this month, for a single photograph and three lines of text that are the only reference to that era.

...

Officials rejected proposals for a permanent historical exhibition that would have discussed the disasters of early Communist rule — especially the Great Leap Forward, a political campaign and resulting famine that killed more than 20 million. Some organizers also wanted a candid appraisal of the Cultural Revolution, a decade-long attack on traditional culture and learning, but that effort was squashed.

Instead, the authorities decided that the exhibition on contemporary China should focus, as did the museum before its extensive makeover, on the party’s triumphs.

Another permanent exhibit, on China’s ancient history, also presents an idealized version of the past. It tells the uplifting story of Chinese ethnic groups pulling together to create “brilliant achievements.”

Meanwhile, in Los Angeles:

Before you are submerged within the museum’s theatrically darkened central galleries, before you learn how the cafes and intellectual life of the Weimar Republic gradually gave way to the annihilationist racial fantasies Hitler outlined in “Mein Kampf” — before, that is, you experience a variation of the Holocaust narrative with its wrenching genocidal climax — there are other trials a visitor to the Museum of Tolerance here must pass through.

You must first choose a door. One is invitingly labeled “Unprejudiced”; the other, illuminated in red, screams “Prejudiced.” No contest. But one door doesn’t open; the other does. Here, evidently, we must admit we are all prejudiced, not just the guards at Auschwitz.
...
The Museum of Tolerance is not alone. Even a modest museum devoted to the Holocaust, like the one that opened in 2009 at Queensborough Community College, offers testimonials by students about how the Holocaust has taught them about tolerance and the evils of discrimination.
...
Though Yad Vashem in Israel and the United States Holocaust Memorial Museum in Washington have remained relatively immune to such sweeping moralizing, in most institutions and curriculums, the Holocaust’s lessons are clear: We should all get along, become politically active and be very considerate of our neighbors. If not, well, the differences between hate crimes and the Holocaust — between bullying and Buchenwald — are just a matter of degree.

In China, none were to blame for the Great Leap Forward's killing millions, and certainly not the Chinese Communist Party and Chairman Mao. In America, everyone's a little bit responsible for the Holocaust.

Chinese communism

William Watson points to the latest Pew survey on global attitudes to free markets.

China tops the scale in support of the free market. Germany also beats the United States. As does Brazil. And France is only one point behind the US.

And while 93% of Chinese surveyed say trade is a good thing, only 66% of Americans agreed.

If they ever re-make Red Dawn with China invading the US, which side do we cheer for?

Malleability of Memory: Update

I'd last week posted a rather nice piece by Saletan talking about the ease with which false memories can be implanted if accompanied by a doctored picture. He noted that the Chinese seemed to be trying this to adjust folks' recollections of Tiananmen.

And here's the variant used during the Cultural Revolution, thanks to Robert Fulford:

Mao advocated making the past serve the present, which meant rewriting the past to improve his image. Where Stalin elevated his own role with doctored photographs, Mao relied on falsified paintings.

Two pictures discussed in Art in Turmoil make the point. Liu Shaoqi and the Anyuan Coal Miners depicted Liu, who was considered a potential successor to Mao, leading a 1922 miners’ strike that in legend began the overthrow of capitalism. Liu apparently made the mistake of criticizing his master and in 1967 a government-backed magazine, Art Storm, devoted much of its first issue to denouncing Liu’s portraits. Art Storm said that 172,077 poster-size copies of the Anyuan painting had been published. The original was demolished and another painting appeared, Chairman Mao Goes to Anyuan, showing that it was young Mao who led the miners.

Note also how celebrity tobacco use seems to be falling through the memory hole. How long until nobody ever smoked, or until they start taking the cigars from the Churchill pictures and adding them into the Hitler pictures?

Markets in Everything: Rent a white guy edition

From The Atlantic comes a strange tale from China:

NOT LONG AGO I was offered work as a quality-control expert with an American company in China I’d never heard of. No experience necessary—which was good, because I had none. I’d be paid $1,000 for a week, put up in a fancy hotel, and wined and dined in Dongying, an industrial city in Shandong province I’d also never heard of. The only requirements were a fair complexion and a suit.

“I call these things ‘White Guy in a Tie’ events,” a Canadian friend of a friend named Jake told me during the recruitment pitch he gave me in Beijing, where I live. “Basically, you put on a suit, shake some hands, and make some money. We’ll be in ‘quality control,’ but nobody’s gonna be doing any quality control. You in?”

I was.

And so I became a fake businessman in China, an often lucrative gig for underworked expatriates here. One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”

...

After a brief introduction, “Director” Ernie delivered his speech before the hundred or so people in attendance. He boasted about the company’s long list of international clients and emphasized how happy we were to be working on such an important project. When the speech was over, confetti blasted over the stage, fireworks popped above the dusty field beside us, and Ernie posed for a photo with the mayor.

For the next few days, we sat in the office swatting flies and reading magazines, purportedly high-level employees of a U.S. company that, I later discovered, didn’t really exist. We were so important, in fact, that two of the guys were hired to stay for eight months (to be fair, they actually then received quality-control training).

“Lots happening,” Ken told me. “We need people for a week every month. It’ll be better next time, too. We’ll have new offices.” He paused before adding: “Bring a computer. You can watch movies all day.”

Due diligence always matters. In China, doubly so.

HT: @Jaisn