The Rise of a New Regulatory Power in the East?

One form of power states can have in global politics is regulatory power (also sometimes called market power).  The idea is that if your state contains a large, rich domestic market, you can derive influence over other parts of the world eager to gain access to it.  For instance, the United States is by far the largest market in the world for pharmaceuticals, which gives decisions taken by the U.S.’ Food and Drug Administration a significant international impact.  Pharmaceutical companies from all over the world have lobbyists in Washington D.C. who carefully scrutinize the agency’s every move (in fact, Big Pharma is the industry that spends the most on federal lobbying).

Scholars of the European Union (EU) in particular have seized upon the idea of regulatory power.  Most international observers agree that the EU is a powerful actor on the global stage, but few agree as to why.  The EU doesn’t have the most jaw-dropping military in the world (as Donald Trump seems to have recently discovered, the U.S. accounts for the bulk of NATO’s combat readiness – one NATO estimate claims that US defense expenditures effectively represent 72% of the Alliance’s overall defense spending).  And while the EU collectively provides just over half of the Official Development Assistance in the world, claims that it is a significant “civilian power” have yet to attract many adherents.  Others argue that the EU’s power stems from its consistent commitment to human rights and other global norms, but critics retort that the EU is just as hypocritical as any other great power when its interests are on the line.

All of which leaves some EU-philes to fall back on the size of its market and argue that the EU’s main influence in the world comes in the form of regulatory power.  And it is true that the EU’s Common Market is the richest market in the world, even with the U.K. poised to leave in a few years’ time.  Industries in developing countries sometimes live and die as the result of internal EU regulatory whims.  On topics like vehicle emissions standards and food safety regulations, when the EU speaks, the world listens (especially at places like the WTO).

As with so many other things, however, the emergence of China as the major new economic power threatens to disrupt this regulatory status quo.  You can see it in lots of places (for example, regulations surrounding renewable energy), but recently it’s become apparent to me in an unusual corner of the world economy: digital games.

Both the Chinese government as well as Chinese society more broadly are worried about their children spending too much time playing digital games, particularly on mobile phones.  In 2008, China became the first country to officially declare internet addiction a clinical disorder, and the country’s relationship with digital gaming has only become more complicated in the years since.

For instance, earlier this year the Chinese government forced all digital game companies that release games in the PRC to publicly report the formulas that calculate their in-game item drop rates.  For context, in many kinds of digital games, you get rewards for accomplishing various in-game tasks: perhaps a better sword or a cool-looking suit of armor if it’s an RPG, or perhaps a unique color scheme for your character in an MMO.  Game makers discovered decades ago that having an element of randomness to these rewards kept people more engaged (and playing longer) than if it was a simple matter of doing X leading to Y.  Accordingly, semi-randomly generated items that “drop” when the player is successful remains a core mechanic for many of the world’s leading digital games.

The Chinese government is now forcing game makers to publicly reveal the rates at which such items are generated. While the government’s announcement didn’t give a lot of detail about its rationale for the move, most observers agree that the main goal is to try and limit excessive gaming: if players can do the math themselves and realize that it will on average take them dozens or even hundreds of hours of performing a same repetitive action to obtain a given piece of loot, they might just give up on the whole thing.  (Or they might just decide to buy the desired loot at the in-game store using real-world currency, but that’s a separate problem.)

Chinese gaming companies are increasingly paying attention to these signals emanating from Beijing.  Last month, the world’s biggest digital game maker, Tencent Holdings,  took the unprecedented move of voluntarily restricting how many hours a day its younger users could play King of Glory, the leading mobile game in China.  Henceforth, players younger than 12 will be restricted to only one hour of playtime per day, and those between 12 and 18 will be limited to two hours a day.  (In addition, the age-verification system, which is already linked to real-world identities, will be beefed up).

Why would a publicly-traded company interested in its bottom line volunteer to limit access to one of its most profitable products?  Perhaps because the influential state-run newspaper People’s Daily had recently run a slew of editorials against the game, calling it “poison,” with a predictable drop in the company’s share price.

Overall, the big takeaway here is that the Chinese government is displaying a willingness to directly regulate a global media industry in a way that used to largely be the domain of Western nations.  What we are witnessing emerging in China right now has the potential to re-shape the global entertainment industry in a way not seen since the rise of the Motion Picture Association of America (MPAA) and its film ratings system in the 1930s.  With digital games having overtaken movies in terms of both their sales and cultural salience, China is taking the lead on regulating an industry that promises to be one of the most dynamic of the 21st century, with consequences that will likely ripple out for decades to come.  Stay tuned… and don’t spend too much time grinding for that loot.


Micro-Managing on a Global Scale: In Private, American Diplomats Can Be Extremely Hands-On

Joint US-Tanzania Pandemic Preparation Workshop, March 2011
U.S. defense officials address Tanzanian counterparts at a Pandemic Preparation Workshop, March 2011. Photo by Khalfan Said (U.S. Embassy, Tanzania). Used here under a CC license.

The 250,000+ State Department cables released by the whistle-blowing organization WikiLeaks in the 2010 incident know as Cablegate can seem like old news nowadays.  In the 7 years since, we’ve had several other leaks of sensitive data troves, including the Sony emails, the Panama Papers, the DNC Committee emails, and the national security dossier compiled by Edward Snowden.  But for me Cablegate remains interesting, even after all this time, because of the unique corpus of diplomatic cables it provided to researchers and ordinary citizens alike.  Taken collectively, the documents offer unique insights into the practices of recent U.S. diplomacy.

For instance, one interesting story that emerges from the cables is how U.S. diplomats are crucial linchpins in the diffusion of transnational modes of governance.  State Department personnel lie at the uneasy juncture of global governance and American hegemony, and are repeatedly seen in the WikiLeaks cables persuading, exhorting, cajoling, wheedling, inducing, and threatening foreign partners to accept (Americano-centric) “international” norms and standards.

Let’s consider a few examples, all drawn from the cables sent from U.S. embassy in Dar es Salaam (since those are the ones I know best).  In December 2005, it was American diplomats based in Tanzanianot Tanzania’s delegation in New York City or any UN official—that passed on names that had been recently added to the UN Security Council terrorist watchlist, just to make sure the relevant Tanzanian authorities had taken note.  A follow-up cable noted that actually Tanzania did not maintain its own terrorist watchlist and quoted a senior Tanzanian bureaucrat (in a rather frank admission) as saying that “the Government of Tanzania and the Bank of Tanzania depend on information from the U.S. Government to keep its list of terrorist entities updated.”

Or consider how, beginning in early 2006, American diplomats sought to get Tanzania to enact domestic legislation as required by its obligations under Article VII of the Chemical Weapons Convention (CWC).  The cables show that U.S. embassy officials met with Tanzanian counterparts on at least seven occasions between February and November 2006 to discuss the issue.  One of those meetings involved a U.S. diplomat sternly warning that Tanzania was likely to miss internationally-mandated deadlines.  Another featured a high-level delegation from Washington visiting Tanzania to conduct (Newspeak-approaching) “compliance diplomacy.”  The write-up of that visit contains an admission that “most [Tanzanian] officials seemed concerned that the purpose of the trip was to chastise them for some compliance shortfall.”

A third meeting involved a U.S. Embassy official meeting with the Principal Parliamentary Draftsman at the Tanzanian Ministry of Justice and Constitutional Affairs to inquire about the status of the draft legislation regarding the CWC.  Assured that the legislation had already been submitted to the Cabinet for consideration, the Embassy official followed-up separately with the Cabinet Secretariat, apparently “just to double check”… and discovered that the relevant legislation had been passed on the day after his/her visit to the Draftsman.  In a scathingly deadpan summary, the official noted that the Tanzanian government may be “overly optimistic” about their implementation timelines.

By November of 2006, the draft legislation was almost ready to be formally unveiled in the Tanzanian parliament–at which point a savvy Tanzanian interlocutor approached the U.S. Embassy with a request for unspecified “assistance”:

“Before we move the bill to Parliament,” she explained, “we would like to hold seminars to sensitize the Parliament.” [She] asked Poloff [Political Officer] what U.S. assistance might be available for sensitization seminars. She noted that, if the [Government of Tanzania] adequately briefed Members of Parliament on the importance of the CWC, the process would move more efficiently.

Due to the unfortunately incomplete nature of the Cablegate files, this is where our knowledge of the story ends.  It’s unclear if the U.S. provided any further help with the legislation, nor whether it was ultimately adopted and implemented by the Tanzanian government (I strongly suspect it was, although a quick (English-language) Googling session didn’t turn up any results).

All in all, though, these brief anecdotes reveal at least three broader lessons about the realities of contemporary American diplomacy. For starters, the degree of paternalism on display is striking–in private, American diplomats speak of actively shepherding desired legislation through the legislative processes of friendly countries.

Second, it’s worth noting the extent to which both terrorist watch lists and the CWC were issues for the United States but largely unimportant for the Tanzanians, who explained that they were (in the words of an American participant) “a poor nation that did not possess missiles or WMD and had as its primary concerns improving the economic and energy situation and eliminating poverty.”  The cables tend to show that American priorities outweigh Tanzanian ones in their bilateral relationship: for instance, only once does the documentary record show Tanzania’s deep reservations about how the U.S. has shown zero indication over the last 50 years of taking seriously its obligations under Article VI of the 1968 Nuclear Non-Proliferation Treaty, which mandates that state parties begin negotiations about complete nuclear disarmament “at an early date.”  At the same time, however, power is a slippery thing, particularly in the diplomatic realm.*  The weak almost always have weapons and tactics available to them, chief among them foot-dragging.  And the misalignment of incentives between the two parties did open up space for Tanzanian state actors to seek various forms of compensation in exchange for their efforts.

A third ironic takeaway from the episodes above is that while American diplomats in the Global South are constantly out doing the legwork of making sure that other states abide by their international legal commitments, their government back home is notoriously loath to accept any international legal obligations on itself (cf. Wikipedia’s handy list here).  This is a major difficulty with having the hegemon’s diplomats play the role of international bureaucrats–ultimately there is no replacing the legitimacy that comes from having a genuine international mandate.

Overall, a close reading of the WikiLeaks cables complicates simplistic understandings of policy diffusion by looking at how direct, embodied interventions by the agents of powerful actors have often facilitated the spread of norms, laws, and ideas in recent global politics.  It moves our attention away from “networks” and the digital realm to the flesh-and-blood human beings who send nagging emails and forward on important messages.  As with so many other aspects of human behavior,  pestering others does seem to like an effective way of getting things done in international diplomacy.


* Occasionally, the WikiLeaks cables reveal the shoe to be on the other foot in terms of their relative knowledge and expertise.  In May 2007 the U.S. Embassy’s economic officer was asked to lobby experts in the Tanzanian Ministry of Natural Resources and Tourism about adding and removing specific animal species from the CITES treaty.  Writing back to headquarters, the officer sounded out-of-his-depth and out-maneuvered, describing his interlocutor as “a seasoned CITES COP veteran and very diplomatic,” and requesting significant amounts of supplementary information from Washington to defend various American proposals.

(If you enjoyed this, you might also like this previous post I wrote about American diplomacy using the WikiLeaks cables.)

For the Next Time Your Cranky Uncle Complains About How Terrible Things Have Gotten


Theories of unstoppable progress can be dangerous, but it’s hard to argue that our world is not a richer, more equal, healthier place in 2017 than it was in 1817.  To the above can be added Steven Pinker and others’ work showing that over the long-term human against human violence is trending downwards.  Maybe 2017 won’t be such a terrible year after all, if we look beyond the headlines to the slow, painstaking work of improving health care systems, teaching everyone literacy and numeracy, and solidifying political institutions.

A deeper dig into the data is available here.

GDP Sure Stinks as Our Go-To Measure of Economic Activity

Measuring the size of national economies is hard.  That’s clearly true in the case of developing countries, where underlying economic data is often not available, made-up, or deliberately manipulated.  But even for rich countries it’s difficult to know how to factor in all the different kinds of economic activity humans engage in.  How should the value of multinational corporations be divvied up across the various countries they are present in?  How should public goods provided by the state be valued?  Should you attempt to measure non-market transactions, like the labor traditionally provided by “stay-at-home” mothers?  What about accounting for negative externalities, like the increasing threat of climate change?  What base year should you use?  And how should you deal with (highly variable) exchange rates?  The Economist recently asked if Brexit had helped France’s economy overtake the U.K.’s, and the best it could come up with was a tepid “probably”.

Every now and then methodological changes by national statistical authorities visibly highlight the artificiality of GDP figures. Consider the following few cases:

  • On November 5, 2010, Ghanaians went to bed thinking their country had a GDP per capita of about $753, placing them among the poorest countries in the world.  The next morning they woke up, however, to newspaper accounts proclaiming that the National Statistics Office had changed the base year for calculating GDP from 1993 to 2006, which (along with other methodological changes) had caused the country’s per capita GDP estimate to jump to $1318.  Overnight Ghana had become a solidly middle-income country!  Woohoo!
  • A recent European change in the way the investments of multinational corporations are counted in GDP figures caused Ireland’s GDP to grow by 26% in 2015…  at least on paper.  But, as an economist at University College Dublin tactfully put it, “It’s complete bullshit!”
  • Speaking of bovine shit, India’s 2015 GDP revisions for the first time officially included the value of the “organic manure” that the country’s livestock produce.  Just like that, India’s GDP increased by 9.1 billion rupees (roughly $135 million), but not before some serious academic work had been done calculating the “average evacuation rates” of various species (who says academics never have any fun!).  The Wall Street Journal has a good primer on India’s new GDP figures… and how other “real-world” statistics like the quantity of exports don’t seem to corroborate them much.

Perhaps the solution, then, should be to just get rid of GDP altogether, as more and more people are suggesting.  But then how would the hordes of quantitatively-minded political science Ph.D.s indulge in their favorite pastime of building econometric castles out of data made of sand?

Risk and Uncertainty in the Developing World

I am not a rationalist, and so at first might be thought to have welcomed a forthcoming article by Kitae Sohn in the Journal of Development Studies that makes a bold claim:

Almost all theoretical and empirical studies implicitly assume that every economic agent understands the concept of risk. We exploited a unique feature of the Indonesian Family Life Survey and argued that this assumption may not apply to the developing world. A third of working men failed to understand the concept of risk, and this incomprehension did not result from a mistake or a preference for simple answers. Moreover, after applying OLS, we found that relative to risk comprehensive men, risk incomprehensive men earned 11.9 per cent less and possessed household assets worth 9.8 per cent less.

Really?  Large segments of working men in Indonesia do not understand the concept of risk?  Also, there are “lower levels of cognitive skills in the developing world”??  Digging deeper into the article, one finds that the core of the analysis concerns how respondents answered a question about future income:

For the first question of the first set, the respondent chose one of two options: (1) receiving Rp 800,000 per month, or (2) receiving either Rp 1.6 million or Rp 800,000 per month, with equal chance. The rational choice is (2). If the respondent chose (1), the interviewer asked the following question: ‘Are you sure? In option 2 you will get at least Rp 800 thousand per month and you may get Rp 1.6 million per month. In option 1 you will always get Rp 800 thousand per month.’ The respondent had the choice of staying with (1) or switching to (2). This follow-up question is critical to this study because it made sure that the answer to the first question did not result from a mistake or a preference for simpler options; instead, the respondent did not understand the concept of risk. Henceforth, we characterised a respondent as ‘risk incomprehensive’ if he failed to choose (2) at the first attempt or after the follow-up question.

Overall, 36.3% (2926 out of 8053) respondents stuck with Option 1 and were deemed unable to understand risk.  Now, there’s lots of things we could say here, but the first that leaps to mind is the researcher’s assumption that of course people always want more money.  Indeed, that’s what’s actually being tested here, and it’s the researcher who is then deeming those who don’t seem to want more as “risk-incomprehensive” and “irrational.”

I’m not saying that there isn’t an interesting finding here, nor that the matter isn’t worthy of further study.  But, taking a step back, I think there’s at least three problematic aspects to this study.  First, there’s a probably unintentional but still uncomfortable echo of the long history of racist discourse claiming that people living in developing countries cannot govern themselves and hence need the help of the British Empire/USA/World Bank/European Union to do so properly.  Second, there is no acknowledgment that many (highly educated) people in the developed world do not seem to properly understand risk either, as Nassim Taleb and others have convincingly argued.  Third, I wonder if the problem for the world’s poor and marginalized is really whether they can’t understand risk or, rather, whether they understand it all too well but feel that risky acts are one of the only ways they have to improve their lives.  I’m thinking here of research by Linguère Mously Mbaye on the willingness of Senegalese migrants to court death in order to reach Europe.  Based on surveys, these migrants seem willing to accept on average a 25% chance of dying if it allows them to reach the continent (or, as is apparently a popular slogan in Dakar, “Barcelona or Die!”).  And other research by Dr. Mbaye has shown that Senegalese migrants exhibit a roughly normal distribution of risk-tolerance vs. risk-averseness.

Overall then, pace Dr. Sohn, it might not so much that the world’s structurally oppressed are missing a vital faculty, but rather that they make all-too rational calculations of the many costs and few benefits of their current existences.