Born Red: Xi Jinping

Xi unambiguously opposes American democratic notions. In 2011 and 2012, he spent several days with Vice-President Joe Biden, his official counterpart at the time, in China and the United States. Biden told me that Xi asked him why the U.S. put “so much emphasis on human rights.”

.. Henry Paulson, the former Treasury Secretary, whose upcoming book, “Dealing with China,” describes a decade of contact with Xi, told me, “He has been very forthright and candid—privately and publicly—about the fact that the Chinese are rejecting Western values and multiparty democracy.” He added, “To Westerners, it seems very incongruous to be, on the one hand, so committed to fostering more competition and market-driven flexibility in the economy and, on the other hand, to be seeking more control in the political sphere, the media, and the Internet. But that’s the key: he sees a strong Party as essential to stability, and the only institution that’s strong enough to help him accomplish his other goals.”

.. The Communist Party dedicated itself to a classless society but organized itself in a rigid hierarchy, and Xi started life near the top. He was born in Beijing in 1953, the third of four children. His father, Xi Zhongxun, China’s propaganda minister at the time, had been fomenting revolution since the age of fourteen, when he and his classmates tried to poison a teacher whom they considered a counterrevolutionary.

.. At a Party meeting in February, 1952, Mao stated that the “suppression of counterrevolutionaries” required, on average, the execution of one person for every one thousand to two thousand citizens.

.. As the historian Mi Hedu observes in his 1993 book, “The Red Guard Generation,” students at the August 1st School “compared one another on the basis of whose father had a higher rank, whose father rode in a better car. Some would say, ‘Obey whoever’s father has the highest position.’ ”

.. They married the following year, and in 1989, after the crackdown on student demonstrators, Peng was among the military singers who were sent to Tiananmen Square to serenade the troops.

.. He was allowed to live in comfortable obscurity until his death, in 2002, and is remembered fondly as “a man of principle, not of strategy,” as the editor in Beijing put it to me.

.. He also paid special attention to cultivating local military units; he upgraded equipment, raised subsidies for soldiers’ living expenses, and found jobs for retiring officers. He liked to say, “To meet the Army’s needs, nothing is excessive.”

..  He soothed conservatives, in part by reciting socialist incantations. “The private economy has become an exotic flower in the garden of socialism with Chinese characteristics,” he declared.

.. Since 2002, the highest ranks of Chinese politics had been dominated by men who elbowed their way in on the basis of academic or technocratic merit.

.. “Party leaders prefer weak successors, so they can rule behind the scenes,” Ho Pin, the founder of Mingjing News, an overseas Chinese site, said. Xi’s rise had been so abrupt, in the eyes of the general public, that people joked, “Who is Xi Jinping? He’s Peng Liyuan’s husband.”

.. They speculate that Xi, in effect, went on strike; he wanted to install key allies, and remove opponents, before taking power, but Party elders ordered him to wait. A former intelligence official told me, “Xi basically says, ‘O.K., fuck you, let’s see you find someone else for this job. I’m going to disappear for two weeks and miss the Secretary of State.’ And that’s what he did. It caused a stir, and they went running and said, ‘Whoa, whoa, whoa.’ ” The handoff went ahead as planned. On November 15, 2012, Xi became General Secretary.

.. Xi believed that there was a grave threat to China from within. According to U.S. diplomats, Xi’s friend the professor described Xi as “repulsed by the all-encompassing commercialization of Chinese society, with its attendant nouveaux riches, official corruption, loss of values, dignity, and self-respect, and such ‘moral evils’ as drugs and prostitution.” If he ever became China’s top leader, the professor had predicted, “he would likely aggressively attempt to address these evils, perhaps at the expense of the new moneyed class.

.. They arrested China’s security chief, Zhou Yongkang, a former oil baron with the jowls of an Easter Island statue, who had built the police and military into a personal kingdom that received more funding each year for domestic spying and policing than it did for foreign defense. They reached into the ranks of the military, where flamboyant corruption was not only upsetting the public—pedestrians had learned to watch out for luxury sedans with military license plates, which careered around Beijing with impunity—but also undermining China’s national defense.

.. Many foreign observers asked if Xi’s crusade was truly intended to stamp out corruption or if it was a tool to attack his enemies.

.. Xi’s government has no place for loyal opposition.

.. Although Vladimir Putin has suffocated Russian civil society and neutered the press, Moscow stores still carry books that are critical of him, and a few long-suffering blogs still find ways to attack him. Xi is less tolerant.

.. So, if you want to stop Western values from spreading in Chinese universities, one thing you’d have to do is close down the law schools and make sure they never exist again.” Xi, for his part, sees no contradiction, because preservation of the Party comes before preservation of the law.

.. For years, American military leaders worried that there was a growing risk of an accidental clash between China and the U.S., in part because Beijing protested U.S. policies by declining meetings between senior commanders. In 2011, Mike Mullen, then the Chairman of the Joint Chiefs, visited Xi in Beijing, and appealed to his military experience, telling him, as he recalled to me, “I just need you to stop cutting off military relationships as step one, every time you get ticked off.” That has improved.

.. “Ever since Mao’s day, and the beginning of reform and opening up, we all talk about a ‘crisis of faith,’ ” the sense that rapid growth and political turmoil have cut China off from its moral history.

.. Xi’s ability to avoid an economic crisis depends partly on whether he has the political strength to prevail over state firms, local governments, and other powerful interests.

.. In 2005, Premier Wen Jiabao met with a delegation from the U.S. Congress, and one member, citing a professor who had recently been fired for political reasons, asked the Premier why. Wen was baffled by the inquiry; the professor was a “small problem,” he said. “I don’t know the person you spoke of, but as Premier I have 1.3 billion people on my mind.”

.. But, when the government announced the recipients of grants for social-science research, seven of the top ten projects were dedicated to analyzing Xi’s speeches

..  “I think, as intellectuals, we must do everything we can to promote a peaceful transformation of the Party—to encourage it to become a ‘leftist party’ in the European sense, a kind of social-democratic party.” That, he said, would help its members better respect a true system of law and political competition, including freedom of the press and freedom of thought. “If they refuse even these basic changes, then I believe China will undergo another revolution.”

.. Last year, it declared a “war against pollution,” but conceded that Beijing will not likely achieve healthy air before 2030.

 

 

 

 

Liberty Reserve: Bank of the Underworld

According to Global Financial Integrity, a nonprofit that monitors international money laundering, Costa Rica exported $5.4 billion in laundered money in 2006, equivalent to 24 percent of its GDP. By 2012, that number was up to $21.6 billion—a whopping 48 percent of GDP.

.. Liberty Reserve did create a GAA, but it was hardly a model of transparency. In June 2010, one of Liberty Reserve’s tech experts sent an e-mail, in Russian, to several people in the company, including Budovsky, about how the GAA would work. The system would allow the Costa Rican government to “view a few statistics,” the e-mail said, but the “majority of these statistics are going to be fake.”

.. Prosecutors dismissed the idea that many legitimate businesses used Liberty Reserve. After the takedown, they noted, users were encouraged to contact the U.S. Attorney’s Office in Manhattan if they wanted their money back. According to prosecutors, only 35 people did so.

Would You Let the I.R.S. Prepare Your Taxes?

But Intuit’s opposition to return-free filing has been ferocious. In the last five years, according to disclosure documents, Intuit spent nearly $13 million on federal lobbying. That is about the same amount that companies many times its size have spent on lobbying. Apple, which has an annual income about 40 times that of Intuit, also spent about $13 million on lobbying in the same period. While documents show that Intuit lobbies on several issues, including immigration, cybersecurity and intellectual property law, the company’s largest lobbying contracts all involve the issue of tax administration.

.. In 2006, using an independent expenditure group known as the Alliance for California’s Tomorrow, Intuit sank $1 million into the race for California state comptroller in support of Tony Strickland, a Republican who opposed ReadyReturn. Mr. Strickland lost to John Chiang, a Democrat, but Intuit’s money was nevertheless effective.

“It was a huge signal to politicians everywhere how much Intuit cares about this,” Mr. Bankman said. “People in other states who had been interested in it started saying, ‘We just don’t want to pick a fight with Intuit.’  ”

 

Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance

The economists Eric Budish at the Booth School of Business and Peter Cramton at the University of Maryland, and John J. Shim, a Ph.D. candidate at Booth, have shown in a study how extreme this financial gold rush has become in at least one corner of the financial world. From 2005 to 2011, they found that the duration of arbitrage opportunities in the Chicago Mercantile Exchange and the New York Stock Exchange declined from a median of 97 milliseconds to seven milliseconds. No doubt that’s an achievement, but correcting mispricing at this speed is unlikely to have any real social benefit: What serious investment is being guided by prices at the millisecond level? Short-term arbitrage, while lucrative, seems to be mainly rent-seeking.