Wednesday, January 03, 2007

Every Picture Tells a Story

It is easy sometimes to miss the forest for the trees. In December there was a meeting between Meg Whitman, the head of eBay, and Wang Lei Lei, the head of a Chinese cellphone company, TOM Online. In this meeting, they discussed ways to work together for mutual benefit. eBay has struggled in China, and needs the help of TOM Online to, in the words of The New York Times, take advantage of the fact that Mr. Wang “is the grandson of a People's Liberation Army General and known for his political connections.” A Reuters photographer, Aly Song, took the following photo:

There were two stories lurking behind this picture. First, the head of a major U.S.-based technology company is a woman, and so ordinary is this that none of the coverage of this event saw fit to mention it. Second, the primary reason the Chinese company is needed is because you have to know (and proper care of) people in the Chinese government to do any serious business there. Here you have a stark contrast between two economic systems. One, that of the U.S., is more (but far from perfectly) based on property rights, and hence tends to reward merit regardless of the physical characteristics of the holder of the merit. I noted early last year that in the U.S. it is significantly easier for women to move up into the high ranks of business leadership because marginal productivity counts more and connections and government influence count less. China is far from perfectly corrupt, but every sensible person would agree that the government has much more arbitrary influence in determining which entrepreneurial ventures succeed than in the U.S. And it is more difficult in a system that relies more on free competition for members of historically favored groups - men, e.g. - to freeze out those of historically disadvantaged groups. I do not know the percentage of top corporate managers in China who are women, but would bet that it is quite small. (Assuming the photographer Aly Song is a woman, it is probably worth noting that she works for a global private company, Reuters.)

Eeach person in the photo is a sort of representative of his or her social system. In Ms Whitman, we see a woman who has risen to the top by virtue of her skill in providing consumers the most value at the least cost. In Mr. Wang we see a (from appearances) rather young man trading on his bloodlines and his “political connections.” In the long run the system that rewards the former package of skills will function better.

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