Why High-Speed Railway Is Not Cost-Effective in America?

Harvard economist Edward Glaeser recently made a ballpark cost-benefit analysis, and argued why high-speed railway is not cost-effective right now in America. In order to make rail feasible economically, one has to increase the people who would prefer train to air by at least 600%.

Is President Obama’s vision of hyper-fast trains racing through America a sound transportation policy or a costly boondoggle? Last week, I began a four-part series on the costs and benefits of high-speed rail. The readers of last week’s post seemed particularly eager to get to traffic congestion and the environment, but space constraints compel me to push these off until next week. Today I will get mired in the sometimes dull arcana of rail costs and direct benefits to users.

I’m going to frame the discussion around an imaginary 240-mile link between Dallas and Houston, but the basic formula for direct costs and benefit is general:

Number of Riders times (Benefit per Rider minus Variable Costs per Rider) minus Fixed Costs.

I’m simplifying, but a formula needs to be simple if interested parties can seriously debate the numbers, and the only way that America is going to get to the right answer on public investments is if numbers trump rhetoric. I will plug illustrative figures into the formula, but not only am I well aware that every number here is debatable, I am hoping for just that debate.

Last week, I cited data from the Government Accountability Office suggesting that $50 million a mile was a reasonable construction cost figure. To make this one-time cost comparable to everything else, which is an annual flow, the fixed cost needs to be converted into an annual cost, which is done by multiplying by an interest rate, capturing the opportunity cost of capital. If that cost of capital is 5 percent (as I said, everything is debatable), then the up-front capital cost is $2.5 million a mile per year, or $600 million for a 240-mile line.

The other cost that is independent of the number of riders is track maintenance. One recent European estimate puts that cost at $140,000 a mile per year for a two-track system. A feasibility study of high-speed rail in Britain came up with the considerably higher figure of $493,000 a mile for surface trains. I’ll stay closer to the lower estimate and go with $200,000 a mile per year, which brings the fixed costs of the track up to $648 million per annum.

Other train costs — rolling stock purchase and maintenance, personnel — more or less scale up or down with the number of passenger miles. Unfortunately, there is plenty of range on these cost estimates. A 12-year-old classic in this field has a number of 10.5 cents amile (in today’s dollars), but one recent European study comes out at 50 cents a passenger mile. Amtrak’s operating expenses run at about 45 cents a passenger mile. I’ll average between 10 and 50 and plug in 30 cents a passenger mile in operating costs, which comes to $72 for a 240-mile trip.

I estimate benefits by comparing rail to air. A train going from Dallas to Houston at 150 miles an hour would take 96 minutes. Southwest Airlines takes an hour for the same route, but the need to arrive early could add on an extra hour. I’ll add on an extra 36 minutes for the driving time to the airports, which means that the train saves an hour. The per-passenger benefit from the high-speed rail line is the saved cost of the Southwest ticket ($80) plus an hour’s worth of time (let’s say $40, which seems generous), plus any added benefits from the comfort of the train (let’s say $20 more). All told, benefits per trip are $140. Since the variable costs are $72 for the trip (30 cents a mile times 240 miles), benefits minus variable costs come to $68 a trip. If these numbers were right (and I think that they are very kind to rail), then the system should be able to run a healthy operating surplus.

How many riders will take high-speed rail between Houston and Dallas? Amtrak gets about 11 million customers in the Northeast Corridor, which has four large consolidated metropolitan areas together totaling 44 million people. If that four-to-one ratio held in Texas, then the high-speed rail link could expect three million riders, and more to come as Texas grows.

But as President Obama has said one of the appeals of high-speed rail is “walking only a few steps to public transportation, and ending up just blocks from your destination.” That’s bad news for Texas. In Dallas less than 5 percent of the population takes public transportation to work, and more than 60 percent of all jobs are more than 10 miles from the city center. For these reasons, driving will continue to be extremely attractive for travelers who want to save parking fees and need cars once they arrive. I’ll go with 1.5 million trips a year (even including future growth), which would make the new rail line about as popular as all airplane flights between the two cities are today.

Now it’s just down to multiplying: 1.5 million trips times $68 a trip means $102 million for benefits minus operating costs. Annual capital costs came in $648 million, more than six times that amount. If you think that the right number is three million trips, then the benefits rise to $200 million, and the ratio between the per rider net benefits and costs drops to one-to-three. This is the cruel arithmetic faced by people, like myself, who would love to be pro-rail. One hint for train lovers who would like to make this comparison look better: make a compelling case that the interest rate should be much lower, as nothing else makes nearly as much difference. Also keep in mind that I haven’t brought in the environment or congestion. They’re up next week.

The Norway Model

Recently an article from New York Times talks about how Norway's economy is still thriving and manages to grow by 3% in GDP last year while the rest of the world is sliding deep into the recession caused by the Global Financial Crisis in 2008. Naturally it makes people wonder, which is the better model, the scandinavian socialistic model, characterized by generous social welfare and high tax, or the Anglo-Saxon laissez faire model, characterized by a privatized social safety net, education and a lightly regulated financial system.

Norway's story is not typical. Its GDP per capita in 2008 is $53,450, ranked No.3 after Luxemburg. Norwegian people feel blessed that their country not only has the stunningly beautiful fjorks, but also sits on top of rich petroleum and natural gas resources near the North sea. The country is also rich in hydropower, which makes refining aluminum, another rich resource they have, feasible. Norwegian fishermen have access to one of the largest salmon fields in the world.

Rich natural resources and a small population might already explain half of the Norway's economic successful story. The other half lies in norwegians' frugal fiscal policy. More than 80% of the oil and gas revenue goes directly to the sovereign wealth fund, which is used to buy assets around the world, such as US treasuries or Japanese stocks. Although the fund's holding takes a hit in this financial crisis, the cost for the assets are actually cheaper than ever. Savers like Norway could take this opportunity and buy up more assets.

The public spending of the norwegian government is much lower compared to other developed countries, thanks to the lack of a strong military program. The saved money is spent in the norwegian tax payers: all norwegian citizens get free health care, free education (including higher education) and a generous financial aid for people out of work. In return, 40-50% of personal income in Norway is taxed. Another important feature in Norway's social structure is that, the income gap between the "rich" and the "poor" is relatively smaller compared to United States. Doctors, lawyers and businessmen make less than 3 times of what a waiter/waitress could make.

People in U.S. might argue that, in system like Norway, no one has the incentive to work. As the petro-resources run up, the country has to face the reality. I partially agree with this view. What makes America the most dynamic economy in the world, partly is that entrepreneurship is strongly encouraged in U.S.'s economic system. People have incentive to take risk, work hard and innovate. Such dynamic entrepreneurship-based economy has dynamic consequence too: companies frequently find the need to lay off or hire people in America, depending on whatever opportunity present. A flexible labor market is needed for a dynamic economy, since entrepreneurs could allocate the most effective resources as they see fit. This is exactly lacking in countries like Japan, Germany or France. The more dynamic the economy is, the more new jobs can be created.

The downside of America's model, compared to the Norway's one, is that the basic social safety net does not support the dynamic economy and risk taking. A nationalized health care plan and free college education for their children, could free workers' minds from worrying about losing their jobs. A worry-free worker is more willing to take risk and pursue what they could potentially achieve entrepreneurship-wise. Additionally, a free health care and free higher education can mobilize people from different social classes, not to mention narrowing the income gap, and therefore maximize the availability and quality of the workforce, and improve the nation's overall productivity.

两首财津和夫的歌

青春之影: 1974年



仙人掌之花: 1994年

Touched

Today my wife let me read her MSN profile. In her profile, she wrote that she wishes to find someone who can enjoy "Castle in the sky" and "Shaun of the Dead", and someone who is as cute as Do la A Meng (a little robotic cat in a Japanese cartoon).

Her profile is about me.

I feel lucky that I could share my life with someone who could and would connect with me spiritually. She and I have a lot in common. Often times we feel happy for the same causes, and angry for the same reasons. We sometimes end up being mad at each other simultaneously, because she's probably having the same feeling that I have. In a sense, it's easy to make her happy, because I feel happy the same way too.

I wish that wife and I could share a same ideal, and a same perspective of what a good and enjoyable life journey is. I am a person who could be easily be touched emotionally, and I am happy about it because I am feeling life. Isn't life is about being touched and touching others' hearts?

Converse All-Star Leather vs PUMA Roma

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Study What You Like

My undergraduate training was received in China. Back in my day, we have a unified college entrance exam, held once a year. Your test score from that exam determines what school you will be admitted to, and possibly what you will study for four years that largely defines your career.

Although I have left China for nearly 10 years, I don't think the situation is fundamentally changed. When a high school student apply for college, he/she chooses what to study not necessarily based on what they like, but mostly on what they can get in. On the university side, each department enrolls a fix number of students, based on a centralized plan, which are somewhat disconnected from the job market. If you have good scores from the test, you are lucky to get into those "popular" programs such as computer science, electrical engineering or finance. If you are less lucky, you will be "allocated" to "less popular" departments, such as natural sciences or literature.

There are two major problems for this model. Firstly, students who are forced to study what they don't like, are highly unmotivated. Therefore they are most unlikely to benefit effectively from the training in that area. At the end of the four years, they find themselves wasting valuable time. Since those unpopular departments often time take in more students than the market actually needs, their graduates have trouble finding jobs.

Secondly, since only the highest scorers can get into "popular programs", the number of graduates from these programs is under-supply. Therefore, these programs remain artificially "popular", because of the subsidy from this particular enrollment system. This might be a good news for students in those disciplines, but not so much for the overall economy. The supply of labor from these disciplines is artificially limited, making the labor cost in those industries higher than what the nation can potentially offer. The students who are forced to study the "unpopular programs" are fully capable of studying the "popular programs" and become a potential competitor in those areas. But the reality is that, those graduates from the unpopular programs suffer from artificially low wages because of the oversupply of graduates than what these areas can consume. Since the wages in the "unpopular" programs remain low, the program remains "unpopular".

At the core of this very problem, is that the number of students enrolled in each majors does not reflect what the market actually needs. I am not saying the main job of universities is to provide vocational training to their students. But let's face the fact that universities are the major source for new labor into the market. If students are provided freedom to choose what they like to study, based on their perceived views of the future job markets, the situation will change: more people can study the now "popular programs", such as computer science, therefore the wage for a computer engineer will decrease, lowering the cost for the industry, and popularity of computer science will gradually reduce because of the lower wages and higher competition; less students will choose to study the now "unpopular programs", therefore the wages in these area go up, making them more attractive. It's more efficient to let the job market decides how many students should be taken into each academic programs.

By letting students to freely choose what they study for higher learning, the income gap between different majors will narrow down. The perceived images of various disciplines will therefore be changed to a more realistic way. Technically, there are no majors intrinsically less popular than the others. But there are definitely some majors need more labor than others, based on the particular economic structure of the country and the nature of each jobs. Simple example is, an economy tends to need more computer engineers than physicists, because computer science are applicable to more areas in the real life. That doesn't and shouldn't mean computer scientists are more valuable than physicists. It only means the current market needs more computer science professionals than physicists. If you force more people to study physics than the market actually needs, the supply pattern is distorted.

Of course, for students to make the right decisions about what to study, accurate and realistic data for salaries and number of job openings should be available frequently. Students should also be allowed to change their major at least once in college, because the job market is dynamic, and we might not make the right decision in the first place.

Obama: more engineers, less bankers

A commentator on the internet commented on Obama urging American kids to study engineering instead of finance:

"I hear talk in canadian news about a shortage of skilled workers too, mandating the dire need to import more skilled workers on temp. work visas.

The problem with that is multi faceted. Our education system sucks, flat out, it's broken because they don't put the money into it and instead use it to get you indebted. The quality of the courses isn't there, the quality of the teachers is not there, student loans are less than 40% of what's required for engineering courses which are easily the most expensive, and you can't reasonably work a full time or even part time job while doing an inhuman program like they are unless you just "manager" your way though it.... which is all they are interested in graduating.

Then you look at your options and find that for a 30 to 40 thousand dollar education you qualify to earn just a little over min wage, but hey it's OK because you can work allllllll the hours you want, nobody will stop you.

Standard of living and quality of life are buzz words from a fairy tale that doesn't exist. Forget job security you don't even get that with engineering. Some of the world's very best analog engineers, the guys who wrote your books and designed some of the best components now in use are all getting the axe right now. There's nobody better, but there's millions cheaper. You don't even have to worry about them comming here to take your job anymore, the companies are going over there.

Anyway for decades they've created a void by underfunding education and making it feasible for the select few, further poisoning it by favoring the manager/ceo type that cheats their way through without knowing a damn.

Their solution to this self created void is always the same, you never hear them say "we really need to see what we can do to produce better and more engineers and make sure they have incentive to go into such a career. No, what they say is "there's big gap, must import".

They import ingineers that come and work for peanuts, send all their money home where their family can live off it like kings. Obviously this is just another bubble to be burst, but before it does they'll take it for all they can, and our countries will rott from the inside out as they so obviously are.
"

Ways to improve the investment environment in developing countries

Developing countries, also known as the emerging markets, have attracted tremendous interest of foreign capitals from their richer counterparts. The reason is simple, there is more room for growth. This huge inflow of capital, usually in the form of foreign direct investment or international bank lending, is subjected to a number of systematic risks that the investors would be aware of. The risks include economic and political ones, such as the fluctuation of currency exchange rate, protectionism-driven trade policies, and local tax codes. Developing countries courting the global capitals nowadays are willing to stabilize their exchange rates, lower their tariffs for imports and reduce the corporate tax that foreign companies. Some ex-developing countries have successfully leveraged these policies to attract foreign investment, and simultaneously build their own economies using the technical and managerial expertise that come along. Ireland, the celtic tiger in the 90s, is a case in point. The low corporate and export tax combined with the highly educated workforce of the country have attracted numerous multinational companies to put regional headquarters and manufacturing divisions in there, and ireland gradually becomes the export platform for these firms. Many cities in China, such as Shanghai, Dalian, Tianjin, now all have the so-called high-tech zones, which are trying to do what exactly ireland, south korea, taiwan, or singapore were doing 10-20 years ago.

There are other risk factors that foreign capitals might face in developing countries that are not as easy to manage. The top three risks are social-political instability, corruption and lack of transparency. Social-political instability affects the security of the capital investment and the market demand (which might be highly manipulated by the governments). The poorest countries in the world have always been those with constant domestic unrest, albeit they might have the lowest wages. Corruption puts the foreign investment in an unfair competition. Foreign companies are restrained to bribe local officials to be favored over a government bid, for example, will lose to another firm which is willing to do so. The winner of the bid might not necessarily have the most cost-effective solution. The bidders who on the other hand have the expertise are discouraged from participating again. At the end, everybody loses except the corrupted officials, who usually are not accountable for how they are spending the tax-payer's money. Furthermore, accurate and updated financial information, macro-economic data, and information about government policies are usually not easily available to foreign investors. As a fund manager deciding which chinese companies to put your clients money into, for instance, you bear a lot of risks: does the company you are researching published trustworthy financial statement? Is the unemployment rate reported by the government accurate enough so that I can use that to plan my factory capability? Will my investment on a certain project be at risk if suddenly the government change its policies to favor another project?

These questions are exactly what a developing country should tailor its economic reform to address to make the country more attractive to a continuous flow of foreign investments. Feasible economic measures to reduce corruption, include reducing relation-based bank lending, better accounting standards and allowing more foreign competitors to enter the local market. If banks are operating on their own instead of being guaranteed by the government, they would only lend loans to the most profitable projects. If more foreign players are let in, with their more sophisticated operations and managements, weaker local companies who used to rely on bribery will be forced out of the competition. Fast and more accurate disclosure of information too is desirable for governments as well as for banks and private companies. In U.S., macro-econ data is published everyday, both by public and private agencies. Investors learn these data and make decisions. Such efficiency can quickly direct resources to the most needed areas away from those non-profitable ones. In developing countries, herding among investors (investors following not their data-driven decisions but the crowd) is a common phenomenon. The root cause is the lack of accurate information that they can study. Such herding tends to amplify the economic cycle and driving output and asset prices higher in booms and lower in slumps. The economic stability will therefore be seriously damaged due to the lack of information.

GE's RnD Budget and Warranty

In a seminar given by Dow's CTO Bill Banholzer, a veteran from GE Global Technology, he briefly mentioned an interesting budgetary strategy of GE's RnD. The warranty of the products from GE, is budegted into RnD's spending. That means, if you RnD folks screw up the design, which leads to a reliability problem of the products, you need to pay for the warranty.

Sounds like a smart idea to me.

Observations from Effective Economy (1)

I will start documenting some characteristics that I observe from effective economies. This will be accumulated bit by bit. Today is about corporate management and culture.

1. In an effective company, the rewards or compensation received by employees (including managerial leaderships)are directly linked to the economic value they have created, in a transparent way. People management involves ranking and motivating your team members by their impacts to the companies in a data-driven fashion. The relevant data should reflect the amount and significance of work they have accomplished.

2. In an effective company, employees are also held accountable for their mistakes. Rules are established to guide employees on daily business practice. The rules should be clearly and unambiguously written.

3. In an effective company, goals and achievements are quantitatively measured.

What can you do during uncertain stressful time?

The economy continues winding down and layoff pink-slips are blanketing everywhere in the globe. Unknowing for how long you can hang on to the job you have, it's an uneasy and grilling experience. I want to share with you a few things on how I deal with uncertainty and this job-related stress. It's not because I am an expert on this topic. Every one has their own stress management tricks. Most of us are already pretty good dealing with stress. But generally what people do is to avoid it. Many people resort to alcohol, drugs, sex, shopping, disorderly eating instead on facing and attacking the stress directly. Here I give you my two cents.

1. Identifying the long term areas that are core and important to you. We all want to have a job. Or you might be losing your home. Or your stock portfolio might worth <10% of it's value a year ago. But these are not the core values that characterize you. Your family and friends, your health, your personality, and your knowledge are. Underlying the volatile, uncontrollable aspects in your life such as net wealth and job, are the fundamentals. And the areas that I just identified are the fundamentals.

2. Stripping your material lust to the very least. Try to think of what you can carry with you if you are about to a refuge. I do this thinking all the time and now I am pretty satisfied having a minimalist material life. Knowing that my family and my knowledge are much more important than the stuff that I own is very relieving.

3. Setting a long term goal and continuing working towards it. Try to picture what you want to be doing in 10-15 years. I, for example, have several goals. I want to be an entrepreneur in china providing effective, free-market solutions to solve business or social problems. There is a lot of white space in China. For example, how to direct the vast selection of manufacturing products to the Chinese market, how to provide an effective quality control system for products, how to help finance entrepreneurship in high-tech, high-growth industries, and how to protect their fruits. To be able to do that, I need knowledge in technology (having a PhD gives me a good start), economy, finance and business management. I won't be surprised if I find myself in a business school somewhere down the road.

$. Try to stay focused. Do one thing at a time. I have to admit that I am not that good in this area.

5. Having said the above three points, all of which are interconnecting and it's about living an active life, the last but not the least is keep in touch with family and friends.

Japan’s Crisis of the Mind - MASARU TAMAMOTO

RECENT events mark Japan’s return to the world’s stage, or at least so it seems. Tokyo was Secretary of State Hillary Clinton’s inaugural overseas destination. Last week, Prime Minister Taro Aso was the first foreign leader to visit the Obama White House. All this suggests that Washington sees Japan, the world’s second-largest economy, as a powerful nation. If only we saw ourselves the same way.

The truth is, Japan is a mess. Mr. Aso’s approval rate recently hit 11 percent, and his ruling Liberal Democratic Party is in open disarray. His predecessor barely lasted a year. The opposition Democratic Party of Japan just offers more of the same. This is largely because we have become a nation of bureaucrats. What passes for national policy is the sum of various ministerial interests, often conflicting or redundant, with jealously guarded turfs and budgets.

There can be no justification for all those mostly unused airports. Or for roads that lead nowhere. Or for the finance minister who appeared to be drunk at the Group of 7 meeting this month in Rome. Our problem is so deep that it sometimes seems that no political party can tame the bureaucracy and put in place a coherent national agenda.

But what most people don’t recognize is that our crisis is not political, but psychological. After our aggression — and subsequent defeat — in World War II, safety and predictability became society’s goals. Bureaucrats rose to control the details of everyday life. We became a nation with lifetime employment, a corporate system based on stable cross-holdings of shares, and a large middle-class population in which people are equal and alike.

Conservative pundits here like to speak of this equality and sameness as being cornerstones of “Japanese” tradition. Nonsense. Throughout much of its history, Japan has had social stratification and great inequality of wealth and privilege. The “egalitarian” Japan was a creature of the 1970s, with its progressive taxation, redistribution of wealth, subsidies and the dampening of competition through regulation. This all seemed to work just fine until our asset-price bubble popped in the 1990s. Today, the hemmed-in Japanese seem satisfied with the knowledge that everyone around them is equally unhappy.

Since the middle of the 19th century, our economic success has relied on the availability of outside models from which to choose. Our model for social security took inspiration from Bismarck’s Germany, state planning from the Soviet Union, public works from the Tennessee Valley Authority, automobile assembly and manufacturing from Ford. Much of Japanese innovation has involved perfecting what others have created. Sony is famous for its Walkman, but it didn’t invent the tape recorder. Japan’s rise to economic greatness was basically a game of catch-up with the advanced West.

So what happened once we caught up? Over the past two decades, the answer has largely been paralysis. Japan’s ability to imitate outside models was mistaken for progress. But if progress is defined by pursuing a vision of a desirable future, then the Japanese never progressed. What we had was a concept of order and placement, which is essentially stasis.

In the West, on the other hand, the idea of progress rests on establishing individual autonomy and liberty. In Japan, bureaucratic rule offered security and predictability — in exchange for personal freedom. The problem is that our current political leaders can’t keep their side of the bargain. Employment security can no longer be guaranteed. The national pension and health plans seem to be insolvent in the long run. People feel both insecure and unfree.

Signs of despair are everywhere. Japan has one of the highest suicide rates among rich countries. There may be as many as one million “hikikomori,” from teenagers to those in their 40s, who shut themselves in their rooms for years on end. Then there are all those “parasite singles” — or unmarried adults living with their parents. But by far our most serious problem is a declining and aging population. Given present trends, total population will likely decline from around 130 million to under 90 million in 50 years or so. By that same time, 40 percent of Japanese could be over 65.

If we want to survive as a nation, we must shed our deeply rooted resistance to immigration. Contrary to widespread prejudices in favor of keeping Japan “pure,” we desperately need to dilute our blood. Our aging nation will need millions of university-educated middle-class immigrants with high productivity, people who will put down roots and raise families, whose pride and success will be the affirmation of new Japanese values.

Japan desperately needs change, and this will require risk. Risk-taking is not common among the bureaucratically controlled. You won’t find many signs on Japanese beaches saying, “Swim at your own risk. No lifeguard on duty.” If that sign were to appear, many Japanese would likely ask the authorities to tell them if it is safe to swim. This same risk aversion translates into protectionism and insularity. The ministry of agriculture, for example, wants to increase self-sufficiency in food. There is not nearly enough critical thinking and dissent in the Japanese news media.

Still, the idea that the Japanese are afraid of risk has no basis in history, for better or for worse. Remember Pearl Harbor? In fact, Japan’s passiveness today is in large measure a calculated and reasonable reaction to its behavior during the Second World War. But today, this emphasis on safety and security is long past its sell-by date.

We have run out of outside models to imitate. We must start from scratch, embracing an idea of progress that is based on innovation, ambition and dynamism. Doing so will take risk — and extraordinary leadership. But the alternative is to continue stumbling down a path of decline.

Masaru Tamamoto is a senior fellow at the World Policy Institute.

Newly Wedded

DSC_0643
Originally uploaded by Weijie Huang

On February 22nd, 2009, Yali and I are finally married, by pastor Luke, at the Trinity Weslyan Church, in Midland, Michigan. After the 5 years of dating, we love each other more and more, to a point that we want to share our life together. As pastor Luke said, after the wedding, we are officially stuff of each other. It's like my body, I will take her wherever I go. Unlike other stuff, this stuff is a commitment, as the round wedding band, there is no beginning and there is no end. From now on we face the world in one pair of eyes, and feel the world with a joint heart.

Switzerland's Economy (1)

Switzerland has more than what it's known for: chocolate, watches and army knives. In fact, this small central european country on a mountain enjoys one of the highest GDP per capita in the world, low unemployment, low inflation and an enviable social political stability. Being small and having little natural resource don't stop Switzerland from becoming the centers of international banking, world-class pharmaceutical and biotechnology research and the synonym of high quality products. I would like to start a research project to study why Switzerland is so successful both economically and socially.

In John Fund's article about Switzerland's economy, he cited several important factors that contributes to the success of this economy: (1) a highly skilled and ethical workforce; (2) an effective financial system; (3) an attractive investment environment; (4) a stable individualistic society owed to a highly democratic political structure.

Switzerland's highly skilled workforce is owed to the world-class and accessible education system. I need to gather more data on this topic. A typical problem for a highly education workforce, which a lot of western countries are suffering, is high wages. To fully employ this workforce while maintaining high real wage, the productivity of the workforce must be justifiably high. Switzerland's idea-based industry can generate high profit-margin, high growth products that sustain the standard of living of this country.

Businesses find Switzerland a trouble-free heaven to operate in, thanks to its respect for the rule of law, an efficiently working judicial system, and high levels of transparency and accountability within public institutions. Flexible labor markets and excellent infrastructure facilities are two healthy features of the business environmen

We've all heard about Swiss banks, especially for its reputation on secrecy of client's information. Professional and independent banking service and a stable currency, attracts deposits worldwide. Additionally, states in the country has a great degree of freedom to tailor their tax policy attract business.

The nation has a high degree of personal freedom, linked to a decentralized government in which voters are the ultimate sovereign through an elaborate system of direct democracy—citizens can both propose their own laws and challenge any action of the government.

Fundamental Problems Underlying Chinese Business

As a chinese, I am proud of the progress in economic development my country has made in the recent decade. Even the rest of the world is deeply stranded in a huge recession originated from the housing and credit crisis in U.S. (now proliferated to nearly all sectors), China's GNP is still enjoying a 9% annual growth, thanks to the huge population. We shouldn't, however, like many of us, turn blind eyes to the existing or emerging problems that might turn out to be the fundamental bottlenecks for china's economy. This great article did a thorough analysis of some problems underling chinese business practice. Here I highlight several examples that I agree.

Although we have been enjoying one the fastest growth in the world and a minority of chinese cities have experience such a significant modernization that we almost forget where our country's economy is right now among our peers and how we come to this point. When you ask different parties what contributes to chinese economic achievement, you surely will get a manifold of answers. But the fact is, accept it or now, China's economy is built on its low labor and operational cost. Due to plenty of supply of cheap labor from the rural area, and less stringent environmental requirements, china has created an economic edge that attracts multinational companies to outsource their manufacturing jobs here. Not really because the chineses are smarter, as many of us tend to think.

If we look back in time, we can see that the path china is on is exactly the one that the "asian tigers" were on 20 years ago: South Korea, Taiwan, Singapore and HongKong used to manufacture low-profit-margin products for the West. If history repeats itself, we will see most of the labor-intense, export-oriented manufacturing jobs that now feed billions of mouths in china, will sooner or later be outsourced to even cheaper locations like Southeastern Asia and Africa, as long as their social political environments stabilize.

Although there are several key advantages that china might enjoy to keep the multinational companies here, such as access to the largest market in the world, the huge foreign currency reserves and holdings of financial assets, there is still an inevitable need to pave a sustainable road for its future. The article has pointed out that, in order to reinvent china's labor-based manufacturing sector, significant amount of efforts should be put to add innovations to the mix. Data has shown that our export is characterized by low-technology and low-quality. Although we have probably the largest population of college-and-beyond graduates in science and engineering in the world, but the lack of high tech brands rooted in china or high tech products coming out of chinese companies still signify the problem that we are not taking advantage of our engineering resources. There are several key issues that stand in the way of innovating in china, as pointed out in the articles. Most importantly, there is a lack of intellectual property protection system in china. Nobody wants to invest in R&D when their results are unprotected and are subject to copy right away. Secondly, majority of the chinese economy is still state-owned. The managements in those companies are frequently rotated, and their rewards are not transparently tied to how much value they have created during or beyond their tenures. There are thus no incentives to innovate in those companies. Don't want to be technologically suffocated in state-owned companies, the best graduates prefer foreign companies to the native ones. The remaining just deviates from engineering. The last but not the least, the financial system in china is so tied to a handful of state-owned companies that private enterprises couldn't get enough of a pie in terms of getting loans from banks. Lack of financial and human resources, and legal protections for their fruits, it's not hard to understand how a small-mid-size business would choose an easy route over a hard one: continue making low profit margin products instead of venturing for sophisticated ones.

The article has also pointed out that the chinese can actually make high quality products. High-end gadgets ranging from Ipods to GPS, luxury apparels to furniture, are all made in china. Lots of the manufacturers can't make their names recognized largely due to legal binding. But that also indicates there is a lack of marketing science to help this manufacturers to create and culture their own brands. Making a good leather handbag might be an art, but alluring billions of people lining up to buy them is the true business, and there must be a way to make that happen in china.

千与千寻

今天看了千与千寻。

我一直很喜欢宫崎骏（或者他的工作室）的作品。从小时候依稀记忆的“高立的未来世界”，到让我感动不已的“再见萤火虫”，宫崎骏朴实的画风，对主题深刻的探讨，还有在作品中体现出的对美好生活的向往和天马行空的想象，都给我留下深刻的印象。可以说每次看他的作品，都让我对生活又多一次感动，多一些思考。

在千与千寻里，小女孩千寻跟着爸妈进入了一个荒废了的主题公园。爸妈因为吃了不该吃的东西，被魔法变成了猪。千寻则被带到一个由巫婆经营的澡堂里打工。在那打工的人都不知道自己的过去，只知道工作和赚钱（他们也没有别的选择）。巫婆的徒弟，小白，仿佛以前就认识千寻。他帮助千寻在澡堂找到工作，和帮她适应这个地方。

这个故事里头充满里对人类社会的映射和比喻。影片有几处给我留下很深刻的印象，甚至让我思考。

一天澡堂里来了一个"腐烂神"。它是一个很肮脏的神。澡堂的人都不愿意让它进去。当它真的进去了以后，新来的千寻只好被派去招呼它。在给这个又臭又脏的神洗澡的时候，千寻发现它身体上插了一根倒刺。当大家费劲了力气把倒刺拔下来以后，发现原来肮脏的腐烂神变成了重新充满活力的河神! 而身上这个倒刺则是人类倒到河里的垃圾。我们对大自然毫不保留的破环和利用，到头来却掀起它又臭又脏。

一个不速之客，“无脸人”，走进了澡堂。因为它能够从掌心里变出无尽的金子，所以澡堂的员工都一个劲的招呼它和讨好它。得意忘形的无脸人不断地吞噬金子换回来食物，甚至还把三个员工给吞噬到肚子里。看见自己的同事被吞噬了，大家一片恐慌。由于千寻不受无脸人金子诱惑，无脸人没法吞噬她。但是其实无脸人并不是吃人不眨眼的恶魔。它只是一个很孤独和寂寞的灵魂。为了引起大家注意和让大家围绕这自己，它因为给大家金子，大家就会喜欢它。在这种虚幻的受宠当中，无脸人迷失了自我。这正比喻现实中很多人，以为享乐和金钱能够换来友谊和别人的关心。但是相反，吞噬越多享乐，就会像无脸人那样越忘记了自己原来善良的面目。

前面说到男主人公小白和千寻仿佛似曾相识。但是自从进了澡堂当徒弟了以后，小白就像其他员工一样，渐渐忘记了自己的名字和过去。在一次偶然的机会，千寻想起了自己小时候曾经掉到一条河里，差点没了命。最后是河水把她冲到了岸边救了她一命。可是这条河后来被填了，并在上面盖上了高楼，所以渐渐没有人知道河的存在。这条河的名字叫琥珀川。当千寻念到这个名字的时候，小白身上的诅咒突然被解除了！原来琥珀川就是小白的真名。他们就是在那次时间中认识的。是拜金的巫婆，或者是现代的人类建设，把琥珀川的真面目所埋没。又一次通过比喻映射了人类的生存对自然界原来的面目给以了无情的，不可复返的改造。看到这里，我不由自主的流下了感动的眼泪。能自由地感动也是一种幸福哦。

最后一个要点就是，记得澡堂里的所有员工都忘记了自己的真正的名字和过去，只顾着工作和金钱。这本身也是一个比喻。澡堂象征这拜金的现实社会和物质享乐。在物质享乐中，人们会迷失自我，忘记童年时的纯真和梦想，而只顾生存和谋生，沦为尘世中毫无个性的众生。

整个故事通过比喻和映射，呼吁我们返璞归真，重新拥抱自然，拥抱自我，不要在物质和享乐中迷失。这就是我的观后感。

Blog Renaissance

I decide to revitalize my blog.

It is easy to abandon a blog, especially when no one reads it.

It is even easier to live a life without any trace, when you seem to be the only one who cares, or doesn't.

We can readily remain alive by keeping breathing, eating, sleeping,and doing whatever animals do to maintain the status of a living creature. Only thing is, time elaspes and evaporates into eternity behind us. If you can't tell the difference between the you of today, and the you of, say, two months ago, you really can't declare that you have LIVED two months. It's just another two-month pass you by.

Human beings need to experience, observe and think, consciously. This is the only way to differentiate ourselves from a machine that is fed on foods and air. A life path is not only a geographical route of where you have been, nor a chronological documentary of what you have done, but a rather a spiritual journey of what you have understood.

Ok, end of my sermon today.

There are many things have happened when my blog was in hibernation during the last couple months. In fact, it's been quite a dramatic period of time. There are sources you can easily get to know what the world has been through. So I will just briefly go through what I have been through:

1. I took part in two catalyst characterization projects. Meantime, by reading and exchanging ideas with colleagues, I learned quite a lot about heterogeneous catalysis, XPS and EXAFS. Concepts of Modern Catalysis and Kinetics by Chorkendorff and Niemantsverdriet is a great book on these topics.

2. I have also got myself involved several other projects, including synthesizing so anisotropical nanostructures and nanocomposites for water filtration applications.

3. I started to pick up organic chemistry left behind long time ago.

4. I started reading economy systematically. Reading the Op-Ed sections in New York Times becomes my daily ritual. Columists like Paul Krugman, Bob Herbert and Thomas Friedman become familiar to me and actually grow on me. Under their influences, I got more and more interested in thinking about how the world can be explained by simple economic principles. The Economist magazine also becomes my econ-tutor. From having no idea of what the articles on it, to slowly making sense of them, I feel that I am seeing the world in a gradually different perspective. Currently I am reading "Economics-making sense of the modern economy" from The Economist Press. I understood the process of globalization, the rise of china and india, and the working of Finance. This is an interesting intellectual arena that I definitely will keep exploring.

5. I started to buy stocks and invest in mutual funds.

6. Like many others, I experienced the economic recession in 2008 (ongoing in 2009). My company has laid off 11% workforce, including some of the folks I know and work with. More layoffs are expected to come. All we can do is, understand that, like the economy, life has ups and downs. We are flexible enough to weather through the crsis.

7. Yes, I am getting married in Feburary, 2009 :)