We Report, the World Decides: Follow-Ups on the News

By James Fallows

1) Chinese airspace. In the last few hours of my current visit to Beijing, news arrives that the People's Liberation Army is going to open up more of China's airspace to commercial travel! And I hear from a friend that a recent airline trip between Shanghai and Beijing, routinely very late (because of routine military controls on air-traffic routes), took off on time and landed early.

Everyone I know has sent me links to these updates, because a big theme of my book China Airborne was that the struggle over control of China's skies was an unusually revealing proxy for the larger struggle between the security-state interests in China, and the business- modernization interests. The news of this past week in China has been dominated by tea-leaf-reading interpretations of the "Third Plenum," which seem to end with a commitment to ongoing economic (though not so much political) reform. The airspace decision, assuming it comes to pass, would be the realization of something that's been "discussed" and "expected" for many years. So, count this as one modest but tangible step in the reform direction.

2) The Foxconn model. Another big question for China, again as I discussed in the same book, is whether its future growth prospects amount to simply more of its current subcontractor-and-infrastructure model. Or whether, on the contrary, China will be able to take steps toward a different, higher-value, "rich country" economic system. The Foxconn company, which I've written about extensively, is another bellwether for this process. Kathleen McLaughlin has an interesting story about its prospects in inland China here.  

3) California surplus. This spring I wrote about Jerry Brown's second incarnation as governor of my home state of California, and his success in balancing the budget. One big subject of dispute was whether his effort in pushing passage of Proposition 30 -- a seven-year surtax on incomes of wealthy Californians -- would be its own undoing, in driving the richest people out of the state.

I quoted people who were skeptical of that claim. Eg:

"The idea that people are really going to move their companies to Nevada because of taxes is nonsense," Paul Saffo, a longtime technology analyst based in Northern California, told me. "Silicon Valley has always been a high-cost place to operate and, like the state, has always been in danger of drowning in the products of its own success."

The latest results seem to confirm that view. California, which under Arnold Schwarzenegger was many tens of billions of dollars in deficit, now has a $2.4 billion budget surplus:

Legislative Analyst Mac Taylor said Prop. 30, which increased sales taxes through 2016 and personal income taxes on the wealthy through 2018, would not have the "fiscal cliff" effect [driving rich people out of the state] that some feared.

We will take our good political news where we can find it, on whatever continent.

This article available online at:

http://www.theatlantic.com/china/archive/2013/11/we-report-the-world-decides-follow-ups-on-the-news/281717/