Monthly Archives: June 2007

A History of China’s Economy

During my senior year at Cornell, I thought it would be a great idea to take an upper-level Econ course about the history of China’s economy. Let me just say that taking this course pass-fail was one of the best decisions I made that year.
This is a little dry, but give it a shot. It’s not as bad as some of the other crap I’ve put on this site,
and there’s a reasonable chance you might learn a little bit.

Jason Carter
Economics 469
December 4, 1997
Topic #2

During the period from 1984 to today, the development of the Chinese economy can be split into two different stages of reform: the new economic model and the socialist market economy. Although both types of reform sought to change the economic structure from planning to markets, the nature and success of the reforms that were implemented varies significantly between the two periods. In general, the reforms of the new economic model failed on many fronts because of difficulties with implementation. The socialist market economy turned these failures into successes through a more complete package of reform based on price rationalization and marketization.

The intent to develop the new economic model was expressed in the Chinese Communist Party document of 1984. The new program called for a wide range of reforms in the agricultural and industrial sectors. In the industrial sector, the state sought to implement similar reforms used in agricultural reform. In order to reduce the level of government control over industrial enterprises, the state allowed the enterprises to retain a greater amount of profit. During the new economic model, this took the form of the tax-for-profit system. This system eliminated firm profit remission to the state and focused on taxation instead. The state also sought to move from mandatory planning to guidance planning during this period. This change meant that the state would give the firms recommended output goals and encourage the firms to adhere to these goals by manipulating the price and tax levels.

Out of the 1989-1991 retrenchment period came another push for reform through the implementation of the socialist market economy. The most important aspect of this period of reform is that the markets are the primary means of resource allocation. The government no longer uses guidance planning or price manipulation to influence the economy. Through major reforms of the price and tax systems, the state lets the markets determine the price levels and establishes a level playing field for all enterprises.

One of the most striking differences between these two periods is the degree of success of price and tax reforms. During the new economic model, the government attempted to implement a wide range of reforms to reduce the state-s control over enterprises. These reforms failed to live up to their potential because the government did not simultaneously reform the price structure. During the socialist market economy, the government made a complete transition to market determination of prices, which enabled other reforms that depended on a rational price system to take effect (such as reform of tax system).

In the new economic model, a majority of the firms fall under the category of guidance planning, not the free market. The government attempted to control the activities of the firms by manipulating prices and taxes. Under the tax-for-profit scheme, the state attempted to move away from profit remittance towards a system of taxation in order to influence the actions of enterprise managers. However, this level of control was implemented without first reforming the price system. During the new economic model, the economy took the form of a dual-track system, with planned and market sectors, and different prices for each sector. This pricing system would cause huge variations in profit rates between firms. These differences in profit rates would result in some firms retaining a huge amount of profit while others would be left with zero profit. In order to decrease the amount of profit retained by certain firms, the state implemented an adjustment tax, which was more or less arbitrary and subject to negotiation. Therefore, the government’s goal to produce a level playing field had failed because the faulty price system created an arbitrary tax system.

During the socialist market economy reform, the government again attempted to reform the tax system. However, the government first set out to change the price system through full implementation of market determined prices. This helped eliminate the dual-track system, which used market prices for outside-plan production and state influenced prices for inside-plan production. The end of the dual-track system led to reforms in the tax system by eliminating wide variations in firm profitability. As a result, tax rates are applied more consistently between firms, and the degree of taxation is no longer subject to negotiation. This reform levels the playing field for all types of firms because taxes are applied evenly to all ownership systems.

Another key difference between the two systems is the varying level of control of the central and local governments. During the tax-for-profit program of the new economic model, taxation authority and tax revenue were divided into central and local portions. Frequently, local governments would have complete control over tax collection and remit a certain amount to the central government. The main goal of this system was to provide incentives for the local governments to improve revenue collection and take a more active role in promoting firm profitability, and therefore increased tax revenue. In contrast to this system, the tax collection system during the socialist market economy is much more centralized, with the central government collecting a majority of the taxes. To accomplish this re-centralization, socialist market economy reformers have to provide incentives to the local government to relinquish their taxation authority. These incentives are often in the form of decreased interference by the central government and increased tax revenue due to a more efficient collection system.

Another key difference between the two reform periods is the level of importance of markets. During the new economic model, markets are only incorporated into certain segments of the economy. Enterprise managers were actually opposed to the reforms because they were used to the planned economy system. The new economic model is a period of transition from a planned system to a market system. As a result, the two economic systems often overlap and conflict with each other, as is the case with the dual-track system. This incomplete switch to a market economy is the main cause of the irrational price structure and arbitrary tax system. The goals of the new economic model failed to be realized because of these problems.

In contrast, the period of the socialist market economy is characterized by a complete switch to a market system. The government first allowed prices to be determined by the market, and as a consequence, reforms in the tax system and an overall leveling of the playing field took place.

The new economic model and socialist market economy reform periods both sought to decrease government intervention through a transition to a market economy. However, a partial transition combined with inadequate reforms of the price and tax structure caused the new economic model to fail and lead to economic retrenchment. The reform efforts of the socialist market economy were more successful because marketization and rationalization of the price system occurred before other reforms were undertaken.

Holy Thursday

The fun stuff’s over. Now we get into the real dreck.

Click here to read the first “Holy Thursday” poem
Click here to read the second “Holy Thursday” poem

Holy Thursday

In the poems “Holy Thursday,” by William Blake, one can see two completely different ideas. In the first poem, Blake tries to express an optimistic and hopeful image of innocent children singing to Christ on the day of ascension. The poem’s rhythm is playful and childish and effectively carries out Blake’s image. In contrast, the second poem is negative and pessimistic and it questions the nature or existence of a God. The children are rejected and abused by society and they are exactly the opposite of the children in the first poem.

In the first “Holy Thursday,” colorful children are marching into St Paul’s cathedral for the celebration of the ascension of Christ. From the footnote, one learns that these children are from the charity schools in London, meaning that they are very poor and probably don’t have a family. Despite their hardships, the children are still described in a joyful, harmonic way in the first stanza:

‘Twas on a Holy Thursday, their innocent faces clean,
The children walking two & two, in red & blue & green;
Grey headed beadles walkd before with wands as white as snow,
Till into the high dome of Paul’s they like Thames’ waters flow.

With an ABAB rhyming pattern, the poem starts with a bouncing, nursery rhyme quality. The children’s problems are not an issue; they are still cute, innocent, and alive, like a river. The beadles that must keep the kids in order are portrayed as old and lifeless men who have lost their childhood innocence. Even though these children are poor and homeless, they are showing hopefulness and optimism when they go to sing the Lord’s praises.

In the next stanza, the children are again portrayed as sweet and innocent, and there is no mention of the hardships they must face every other day in their life. There are a few different images that Blake gives the reader to express his idea that children are pure and free-flowing characters:

O what a multitude they seemd, these flowers of London town!
Seated in companies they sit with radiance all their own.
The hum of multitudes was there, but multitudes of lambs,
Thousands of little boys & girls raising their innocent hands.

Here, the children are a beautiful and vital part of the London society. They are “flowers” that give pleasure to all men and women. Blake fails to mention that these children are a blight and burden to mankind. They are victims of a cruel and harsh world, and as a result, they reflect images of misery and poverty. However, in this stanza, the children are innocent lambs who have a “radiance all their own.” They are beautiful flowers and are pleasing to the entire world.

In the final stanza, the children are singing to the heavens with songs of joy. They are singing the praises of the Lord to heaven on this glorious day:

Now like a mighty wind they raise to heaven the voice of song,
Or like harmonious thunderings the seats of heaven among.
Beneath them sit the aged men, wise guardians of the poor;
Then cherish pity, lest you drive an angel from your door.

Here, the children are powerful and mighty and are capable of communicating with the heavens above. They believe that God truly loves them in spite of the fact that they are really the wretched of the earth. Even though they are penniless and homeless, the children raise their hands and sing their praise and thanks to Jesus.

In the second “Holy Thursday,” the tone of the poem changes completely. In this poem, Blake says that the children are poor and miserable in an otherwise prosperous environment. He concludes that God must not care about these children since they are forced to live under these conditions.

In the first stanza, the reader can obviously see the changes in tone. The lines aren’t long and cheerful with a silly, childish rhyme. These lines are blunt and to the point, and their meaning is very harsh:

Is this a holy thing to see,
In a rich and fruitful land,
Babes reduced to misery,
Fed with cold and usurous hand?

This procession into the cathedral has religious intentions, but the speaker wonders how holy it is to have so many pitiful and miserable children in a world that is so rich and prosperous. It doesn’t seem possible to him that these children are singing to the Lord out of pure happiness and thanksgiving:

Is that trembling cry a song?
Can it be a song of joy?
And so many children poor?
It is a land of poverty!

The speaker finds it hard to believe that these children are actually singing out praises of the Lord. He sees them so unhappy and so poor, and yet they are thanking Jesus for all that he has done for them. The series of questions by the speaker in this stanza implies a tone of disbelief and amazement that heightens throughout the poem.

In the last two stanzas, the speaker offers an explanation as to why these children are so poor and pitiful:

And their sun does never shine,
And their fields are bleak & bare,
And their ways are fill’d with thorns;
It is eternal winter there.

For where-e’er the sun does shine,
And where-e’er the rain does fall,
Babe can never hunger there,
Nor poverty the mind appall.

The speaker believes that the life of the children is always dark, bleak, and bare. It will always be difficult, cold, and barren. He believes that the children are poor because they never have any sunshine or any rain. In other words, these kids don’t have the wonderful and plentiful eye of the Lord upon them. Blake believes that man could not decline into such a pitiful state if God is constantly watching over him. Throughout the ceremony, the children are praising God and all of His works. This praise now seems very ironic since these children are not under the watchful eye of the Lord.

In these two poems, William Blake expresses two totally different ideas. In the first poem, he portrays unfortunate children as blessings to society and shows their gratitude towards God for all that he has done. In the second poem, Blake shows the reader the image of wretched children praying to a God who does not care for them or their condition. These two examples show the different ideas that Blake had towards the nature of God.

A Virtuous Hippo

The writing here is not particularly funny or enlightening. What I do find interesting though is my use of words like “epistle” and “Laodiceans”. Very uncharacteristic for this stage of my writing career.

Click here to read “The Hippopotamus”

A Virtuous Hippo
Jason Carter
English 400-1

In T.S. Eliot’s “The Hippopotamus,” the reader can see Eliot’s contempt for the church and all of its corruption. He compared the church and its people with a lazy Hippopotamus. By the end of the poem, the Hippo is raised up to heaven with choirs of angels by its side while the church remains on earth amidst a dense fog. By using symbols, Eliot show the reader that even the lowliest creature on earth has more merit than the church with all of its corrupt leaders.

The epistle of the poem first expresses Eliot’s disgust with the apathy that the church exhibits. He makes it known from the very beginning that this poem is directed towards the church members who are indifferent and lazy, such as the Laodiceans. This group of people was described by St. John as “lukewarm, and neither cold nor hot.” Apparently, these people had no emotion towards religion, and Eliot wrote this poem to let them know what they can expect in the future.

In the first six lines of the poem, we are given the description of a hippopotamus. This Hippo is much like the human race because, like it, we are simply made out of “flesh and blood.” The image that we receive of the Hippo is of a fat, lazy, beast sleeping in the mud. This animal represents the lowest person in society, who is worthless in relation to the rest of the world. Eliot attempts to contrast this image with that of a solid church founded upon a rock. This comparison seems almost satirical when one considers that the rock in question is actually a human being. How stable is the church when it is built upon something that is often as worthless as an animal sleeping in some mud? Thus, we wonder how serious Eliot is with this comparison.

In the next two stanzas, Eliot continues to contrast the church with the hippo. Eliot goes on to say that the Hippopotamus often has problems collecting items necessary for survival because it does not take the proper steps essential for acquiring all that it needs. Here, we see that the Hippo is too lazy and unmotivated to better its position in life. Eliot contrasts this with the church, but once again, his comparisons seem to be deliberately wrong. He states that the church never needs to act in order to receive money from its members. At face value, this may appear to be good, but in actuality, the church is just as lazy and worthless as the Hippo. It does absolutely nothing to acquire money, and it does nothing for society in return. Unlike the Hippo, who can’t even take a mango from a tree, the church takes all that it can from society. Its outstretched arms are capable of collecting dues and contributions from members around the world.

In the last three stanzas of the poem, the reader can see that the Hippo has been taken into heaven with a lot of praise and glory despite its apathy and laziness:

I saw the ‘potamus take wing…
And quiring angels round him sing
The praise of God, in loud hosannas…
Among the saints he shall be seen
Performing on a harp of gold.
He shall be washed as white as snow,…

In spite of the Hippopotamus’ lack of ambition and worthlessness, God has forgiven him and has taken him into heaven. The Hippo is a symbol of the most inactive and lazy being on this planet, and yet, it makes it to heaven while the church must remain on earth. Eliot is showing the reader here his belief that the church is extremely corrupt; so bad that it does not deserve to enter heaven.

It is in this way that T. S. Eliot shows the reader his idea that the church is so awful that its leaders don’t even deserve to enter heaven. By comparing the church to a Hippopotamus, we can see that the church is even more unscrupulous than the lowest and most worthless creature on earth. If a hippopotamus-like person can make it into heaven but a church member cannot, we can see how wretched and sordid the church really is.

How to Buy a Turkish Rug

In September 2006, Stephanie and I traveled to Istanbul for the first leg of our honeymoon. We knew in advance that we would buy a Turkish carpet, but had zero experience about how the process works or how much to pay. I’ve written up our experience in hopes that it will help someone else.

Picking the Right Shop

Since you are going to be dropping several hundred to several thousand dollars on a rug, I recommend picking out a nice shop that is 100% dedicated to selling rugs. There are many, many stalls and souvenir shops around the city and in the Grand Bazaar that sell some combination of art, jewelry, rugs, spices, sculptures, and clothing. I am sure there are some fantastic deals in these shops, but I never felt confident that I was getting a high quality rug and the selection was never great. We probably paid more by focusing on the nicer shops, but it was worth it to know that we were going to get a quality product. I recommend Bazaar 55 in Sultanahmet, where we purchased our rug.

The Ritual

For most people, the purchasing process will be uncomfortable, as it will involve a lot of pressure and haggling. If you have committed to buying a rug, though, take a deep breath and try to enjoy it.

Once inside the showroom, you will be offered coffee, tea, water, or something else to drink. If you are going to stick around for more than a couple of minutes, you should accept, even if you don’t really want anything. The beverage ritual is a huge part of the experience; it is the Turkish way of welcoming you to their store and making you feel comfortable. We resisted at first, not wanting to put them out, but we quickly realized that the offer was not really optional and to continue to say no would be considered rude. I ended up drinking several glasses of apple tea and water throughout the experience.

As you are sipping your tea, they will begin unrolling several dozen rugs of all shapes and sizes. Don’t be shy about expressing your preference for size, material, or color; there are hundreds of rugs and it will help them narrow down the selection. And don’t feel bad about how many rugs they unroll, it really is the only way to see them. Let the salesman know which rugs catch your eye and he will clear out the rest and put those side-by-side.

At this point, you are full of tea, surrounded by a hundred unrolled rugs, and faced with 3-5 that you really like. Psychologically, it will be very hard for you to leave the store, and that’s really the whole point of the ritual so far. If you truly do not see anything that you like, don’t feel guilty about politely thanking them for their time and heading for the door. At the end of the day, it is your money and you have to be happy with your selection. Don’t buy anything out of guilt.

If you do see a carpet that you like, it is probably in your best interest to move forward with the negotiation and making the purchase. Your vacation time is valuable and unless you love haggling, you won’t want to go through this process more than a few times during your trip.

The Negotiation

To get the process started, it’s a simple as asking “How much?” The salesman will flip over a corner of the rug, inspect the tag, and give you a price. The price usually isn’t written down; he’s just getting size and material information from the tag and setting the upper price. You could accept this price and be done with it, but you are most likely paying a huge premium just because you are uncomfortable with haggling. You are honoring a centuries-old tradition of haggling by rejecting this price and moving to the next step.

Now that you’ve got the upper bound, you have two options: counter with a much lower price or just act coy and uncertain about the purchase. The first option is more direct and will close the deal faster, but you are guaranteed of never going lower than what you offered. We took the second approach and expressed hesitancy for the next half hour. It went something like this:

This is a beautiful rug and obviously high quality, but…

  • this is the first shop we have visited and would like to see more options
  • this is the first day of our trip and it is too soon to make this purchase
  • we are uncertain about the color / size
  • this is a substantial purchase and we will need time to think it over
  • it is lunchtime and we can’t make this decision on an empty stomach
  • we’d like to take a walk around the block and discuss the purchase privately

Take your time. Enjoy another cup of tea while looking skeptically at the rug. You may want to feign an exit once or twice. As this goes on, the price will continue to drop. Always be polite; as soon as you lose your cool, you lose your bargaining power and will come off as rude and disrespectful.

How Much Should I Pay?

There is no right answer to this question because the price is completely subjective. I guarantee you that the material, labor, and overhead costs for the rug are far lower than your lowest imagined price and you are never going to get close to the actual cost. Ultimately, you should look to the future; think about that rug in your home and the enjoyment that you will get from seeing it there and remembering the trip. What sum of money are you comfortable parting with today for that future happiness?

As you drive down the price by acting skeptical and attempting to exit, you will eventually reach a point where the price stops dropping and it seems like they might actually let you leave the store. This is a sign that you’ve probably hit bottom and won’t get any lower. If the price is equal to or less than the figure you’ve set in your head, then the rug is a good deal for you and you should make the purchase. Sure, you are paying way more than the actual cost, but you have to stay focused on your own concept of value and happiness. Just remember, you would have paid way more for the same rug at Macy’s and the experience is completely different.

Some figures from our purchase that may help you: we settled on a 5’x6′ wool rug for $1,000, which was approximately 40% lower than the initial quote. Maybe we got ripped off, but we love seeing that rug every day and have never regretted the money we spent on it. And that makes it a good deal for us, which is all that matters in the end.

One comment about shipping: if the rug you select is about the same size as ours or smaller, it’s possible to save up to $300 in shipping costs if you’re willing to get it back home as checked or carry-on luggage. That decision depends on how much traveling you have ahead of you and how much extra weight you can tolerate.