Hasan Kazmi and Andy Umans, two good Columbia Business School buddies who I accompanied on the Chazen study trip to Dubai last Winter have finally had their essays published on the Columbia blog.

They summarize meetings we had with McKinsey, Goldman Sachs, Abraaj Capital, Istithmar, Mubadala and try to make sense of our beloved little Gulf state.

Not sure I agree with Hasan‘s statement

A significant amount has been written about the debt crisis of Dubai World, the parent company of Istithmar. Many leading commentators and journalist have indicated that Dubai is on the brink of financial collapse. After our trip, I can safely say that Dubai is not going to collapse. There is no fundamental problem with the actual projects and investments; the problem is merely in how they were financed.

What does collapse even mean? Dubai’s finances are structurally broke, this isn’t simply a cyclical bubble pop, there’s more to it. The debt taken on over the past decade was enabled by the implicit expectation that Abu Dhabi would be there if (and more recently when) things soured. I can attest to this based on first-hand exchanges I had with bankers when I worked at the Dubai government – and that was back at the start of the decade.

Dubai will not collapse in the sense that the skyscrapers and man made islands won’t disappear (ok, the half-built islands might) but Dubai will I think emerge a fundamentally different place post-bubble. First and foremost it will never again have the kind of autonomy it has enjoyed since its contemporary birth. Now that the Abu Dhabi guarantee is explicit, the cousins up the coast will have a significant say in how the city-state is run.
Second the deleveraging process in Dubai has only just begun. It will take a while for the economy to work through the debt and real estate overhangs.
I would also argue that many of the investments Dubai made or announced were fundamentally unsound and not just victims of poor financing strategies.

Andy‘s history is for the most part spot-on, though some of the analysis

Dubai is the busiest port in the Indian Ocean basin after Singapore, far surpassing other ports not only in the Persian Gulf but also in East Africa and South Asia. We visited Dubai Ports World and toured their impressive facility. Their strategic plan calls for an increase in shipping volumes from 46.8 million 20-foot equivalent units (TEUs) in 2009 to 97 million TEUs by 2017. Despite its size, the port only employs roughly 4,000 people. If this is the economic driver of Dubai, one is left wondering why the emirate has built a city with a real estate capacity for a population of two million.

The investments in the port facilities in Dubai (great example of the emirate’s sound investments) need to be looked at in terms of the overall effect and potential they produce for the Dubai economy. The port may only directly employ 4,000 people but combined with the various free zones and other infrastructure investments it ensures Dubai position as the default regional base for international and regional businesses which translates into hundreds of thousands of jobs.

He’s right to highlight the importance of India to Dubai’s economy but the city-state ‘s geographic dependencies are more diversified that the article implies. Iran, Africa, Russia and the GCC are a few of the other important economic partners.

I take issue with this

Most expatriates we met have been in Dubai since no earlier than 2006, and most planned to leave relatively soon. Furthermore, it is virtually impossible to obtain a residence visa except by employment.

Firstly, there are plenty of entrepreneurs and expatriates that have made Dubai home for many years and decades. Secondly, in response to the visa statement, how does this really differ to other countries? There are immigration barriers to the movement of human capital everywhere you look in the world including the US where Andy is from and South Korea where is currently lives and works. If anything the barriers to entering and working in Dubai are amongst the lowest in the world (now the terms of the employment is another matter altogether).

He had a great concluding passage:

In contrast to its portrayal in the media, Dubai’s boom in the 2000s was a natural continuity of its historical success, built on openness and trade. As the Standard Chartered economist pointed out, wild as some of the real estate projects may have been, they were prerequisites for generating publicity and attracting skilled international talent. The McKinsey consultant compared Dubai’s overinvestment in real estate and infrastructure to American overinvestment in rail during the turn of the last century: It may have precipitated a financial crisis, but it left the country with excess capacity in transportation that spurred further economic growth. Dubai willcertainly need to be innovative, create new industries and attract a more varied array of people if it expects to fill its glut of office and apartment towers, but at the least it will likely remain successful in its bid to be the trade, logistics and finance hub of the Gulf. From that position, with competent leadership and a little bit of luck, it can continue to capitalize on its advantages to ride the wave of economic growth spreading throughout the Indian Ocean basin to a new era of prosperity.

Interestingly neither Andy nor Hasan talked much about the role of politics in the city-state’s recent missteps. The lack of checks and balances has been a double edged sword- on the one hand it has allowed an incredible transformation to take place over the last few decades, on the other it led to some very obvious strategic and financial mistakes that have in essence bankrupted the emirate and tainted what still is a hugely compelling case for a new type of Middle Eastern city.

PDFs:
Hasan’s report: Oasisi or Mirgae in the Desert.
Andy’s report: Dubai’s Bid for Sustainable Prosperity.

NYTimes, Bloomberg, and the WSJ all report the private equity don’s generous gift that will help Columbia build its new campus at the controversial Manhattanville project (see this Chronicle of Higher Ed piece for a good rundown of the storied Columbia – Harlem relations).

Apparently the search for an architect is on, let’s hope we end up with an interesting choice that makes up for the ugly current home – Uris Hall memorably called a ‘monumental offense’ in 1997 by David Garrard Lowe in the City Journal:

Uris Hall, he wrote, “is a characterless Brobdingnagian structure whose facade, with all the allure of a crematorium, bespeaks a place where people come not to begin their life’s adventure, but to end it.”

Christopher Szabla adds to the Uris-Hate in a 2005 Columbia Spectator piece:

… what looks like a smashed air-conditioner unit in the midst of their historic grounds. In this light, it defies belief that such a monstrosity as Uris Hall has been permitted to desecrate Columbia’s otherwise elegant landscape for over four decades now. With its flanks and crude rooftop looming arrogantly overwhelming Low’s graceful dome, its ballooning rear end projecting twice the length of an Avery or Fayerweather, this behemoth, more than any other architectural excretion endured by this university, mocks the spirit of Charles McKim’s classroom buildings. Its bombastic hauteur would be seen as tasteless were its Orwellian overtones not so frightening.
Indeed, architectural trends come and go, but Uris has been consistently unloved from its conception. Incensed students picketed its groundbreaking, and an architecture professor’s radio interview concerning the structure was confiscated by campus security, unaired. To add insult to injury, Uris was, in the 1980s, retrofitted with the addition of a bizarrely incongruent facade which de-legitimated whatever tenuous connection it may have once had to the monumental axis of columned buildings stretching from Butler to Schapiro. The building became, after this fiasco, beyond any justification, theoretical or otherwise. It is time that its aesthetic reign of terror be put to a swift and decisive end- it should be demolished with all the violence it has committed upon its surroundings since its ill-advised creation.

Here’s what the orginal bilding looked like – far more elegant than the current bizarrely incongruent facade.

About to post some Columbia Vs Berkeley and realized this review of the spring semester at CBS was still in my drafts box:

It’s surprising just how different the first year spring semester experience at business school is from the fall.

Students have generally found their grooves, their cliques and, for many, their summer internships. So while still a highly intense few months it felt far more settled than the manic first term.

Focus.
MBA Students at Columbia have more options to break from the cluster-based core curriculum and to design a more personalized schedule based on individual interests and ambitions. Students that started school with vaguer career goals start eliminating choices (based on updated interests or just as often updated reality checks). Responsibilities also ramp up for the club Associate VP positions. For many these choices start crystalizing the directions that their lives will take for the next decade or so. The gravity of all this is probably lost on most of us as we scramble to get assignments in on time, submit cover letters to potential employers and experience a little of what the world’s greatest city has to offer.

Recruiting.
There are many many moments where business school just feels like an expensive two year recruiting camp. Time and time again I had to step back and remind myself that I was at grad school to learn subjects that fascinated me for how they make sense of, and shape, the world we live in.
The weighty worries of student loans and uncertain futures though often proved formidable. This is where the collegiate supportive environs of Columbia Business School came in handy (students, first and second years, professors, our office of school affairs and the career advisors all play their roles here). I know I wasn’t alone in those 3am moments with a paper due the next day, a cover letter and application to an incredible job due at 9am (and probably a potentially life-changing music show a half hour subway ride away!) when I looked around Butler library and contemplated the fact I was levering up to the tune of a hundred thousand dollars for the privilege of putting myself through all that stress!

As the whitest winter New York had seen in a long time gorgeously turned into spring though, light seeped through the end of the stress tunnel as more and more of my classmates secured summer jobs. The bankers first, followed swiftly by the consultants and then the rest of us over the remaining couple of months. As it each wave of recruitment took place a noticeable shift in campus energy (in and out of the classroom) took place. By summer, an unrecognizable relaxedness permeates Uris. Again this all points to the focus at business school of securing a job over learning. Many students tune out of the academics as soon as they sign their internship offer letters.

Others, myself included, didn’t have that choice. Recruiting can go right down to the wire. Perhaps 20% of the student body wrapped up our first year without having accepted or received an offer. This can be (and certainly was for me) a nerve wracking period (this is especially pronounced at Columbia as we wrap up our semester a couple of weeks before our peers and so recruiting doesn’t really officially end until three or four weeks after our last exam).
Most if not all my classmates now seem to have found something exciting to keep them busy over the summer. The coolest are working at McKinsey, Amazon, Google, MTV, Opening Ceremony, tech, media, retail companies to name but a few.

Travel.

One of my favorite parts of spring was traveling with classmates. Apart from the Silicon Valley Teck Trek (see photo of us at Facebook on the right) and the Dubai Chazen trip which took place just before school started, I managed to squeeze in a couple of snow boarding trips (Vermont and Cat Skills), Shanghai, Boston, Coachella (were it not for a misplaced passport, San Diego would have been on there too for a sports case competition). These were all incredible and I highly recommend taking part in as many trips (fun, recruiting and academic) as you can at b school.

They allow for more intimate environs to bond with class mates and are great ways of getting to know people with different class schedules. There’s 1,500 or so MBAs at Columbia so there’s always new people to meet and it’s otherwise a little too easy to stop getting to know people outside your year / cluster etc.

Some of the trips are official university trips which are cool in terms of access to businesses etc and also great ways to get to know professors better. The others are student run and organized and have a more social focus.

Academics – last and least?
Academics can often seem a bit of an after thought at business school. Not to take away from the many studious students who ace most if not all of their subjects- often the same students who seemingly live in the library or else were only really seen on campus when in class.
The structure of business school (at least at Columbia) was such that unless you were of the minority gunning for dean’s list the incentives and penalties to do well or not do poorly barely exist. It is far too easy to pass subjects without having really grasped it well enough to practise or even well enough to not potentially cause some damage – alittle bit of knowledge and all that – .
There is too much fluff squeezed into the business school curriculum (leadership, ethics etc – mostly in response to supposed developments in the real world) that detracts from the time and focus better spent on statistics, economics, mathematics and finance.

A summer gift in the form of playlist.

The Economist’s annual Which MBA? is out:

Haas stays at #3, Columbia moves up to #12.

Booth jumps to the top spot where it often is on other lists and seems anecdotally accurate based on how impressive the Chicago grads I have met are.
Different schools have different strengths of course. Columbia is a superb finance school (also v good if you want to become a consultant), Haas very strong on tech / green tech and better on entrepreneurship too (planning an expanded CBS v Haas post soon).

I am pretty sure there’s a way to define your own personal rankings by changing the weights of the metrics used to assess the schools but I can’t seem to find it on the website. Might be on the iPhone app though it seems the new version hasn’t made it to the app store yet.

Here’s the ranking broken down by category:

And finally there’s a look at the ROI’s at various schools:

The Financial Times’ Lex asks:

Where are tomorrow’s masters of the universe? Red in tooth-and-claw investment banks are pulling out all the stops to woo graduates. Nomura of Japan, arguably the world’s most socialist nation, is resorting to fat paycheques. Graduates are reportedly being offered $75,000, triple the average starting pay in Japan. US and European banks grumble about a dearth of applicants. In the UK, state-owned Royal Bank of Scotland and the about-to-be-defunct Financial Services Authority are among graduates’ top picks. Nearly twice as many graduates plan to apply to charities as to investment banks, according to High Fliers Research. Pinning graduates’ disenchantment with banking to the recent crisis seems a tad disingenuous: today’s bright young things simply have less fire in their bellies. Half of those surveyed by Orange, the mobile network, put happiness as their number one work requirement; 43 per cent wanted “nice colleagues”. Bring back Gordon Gekko.

Not many signs of happiness being students’ number one work requirement at Columbia Business School where I sense Gordon Gekko remains a revered role model for many.

The Middle East Institute presents a lecture entitled, “Media Revolution in the Middle East” with Wadah Khanfar, the Director-General of Al-Jazeera network. Khanfar was ranked as one of the most Powerful People in the World by Forbes Magazine, named a Young Global Leader by the World Economic Forum (Davos), recognized as the 3rd most influential Arab in the world by Arabian Business, and one of the most influential Muslims in the world (Royal Islamic Strategic Studies Centre). During his tenure Al Jazeera went from a single channel to a media network with multiple properties including the Al Jazeera Arabic channel, Al Jazeera English, Al Jazeera Documentary , Al Jazeera Sport, Al Jazeera’s news websites, the Al Jazeera Media Training and Development Center, the Al Jazeera Center for Studies, Al Jazeera Mubasher (live), and Al Jazeera Mobile.
Date: March 24, 2010, 12:30 pm to 2:00 pm EDT
Location: Columbia University, Morningside Campus, International Affairs Building, Room 1512
Contact: For further information regarding this event, please contact Leia Reisner at lrr2131@columbia.edu

“I hate panels” blogged Fred Wilson recently, riffing on a Mark Suster post about getting the most out of panels.

There are many conferences at Columbia Business School, mostly organized by student associations. I have been to the Retail & Luxury Conference, the Media & Entertainment Conference as well as Cyberposium at Harvard Business School, but there’s almost a conference for every industry club (PE/VC, Marketing, Brite, Social Enterprise etc).

The conferences’ stated aims usually include networking / recruiting opportunities for students, raising Columbia’s profile and in theory allowing for thought leaders in academia and the field to exchange ideas.
I can’t help but feel that none of these objectives are met very well. Perhaps it is time to rethink these formats.

Fred again:

All that said, I really hate panels. I hate watching them and I hate being on them even more. I think it’s a lazy way to participate in a conference. You show up, answer a few questions, sit up on the stage with a bunch of other people, and then go home.

I much prefer the 15-20 minute talk with Q&A afterward. I think I’d prefer even more a 10 minute talk with longer Q&A afterward.

I like the idea of programming a series of interviews rather than panels that allow for deeper explorations of a given topic. Perhaps a faculty member and an industry thought-leader, or two industry folk, or two competitors interviewing each other. The Q&A sessions can sometimes be the best part of these things, but here too there’s perhaps room for improvement. I like the idea of sourcing questions from students, faculty and attendees in the period leading up to the conferences and during the sessions, this can be done via twitter, facebook, sms, email etc and then the moderator or the conference team can select some of the more interesting questions to get conversations flowing.

I also like the Pecha Kucha / Ignite formats of constraining actual presentations to short and impactful and then allowing for in-depth Q&As to follow.

In terms of networking, small break-out sesssions, breakfasts and lunches etc with the speakers can be organized and students can apply to attend or a lottery system can be implemented (I think a combination of the two would result in the most passionate and interested students attending whilst maintaining fairness in the process).

The conference format as it is at Columbia is broken. I’d like to see us fix and improve it for next year’s round.

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• Cyberposium Harvard Business School (halleyscomment.blogspot.com)
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I am as awed as usual by China on the Columbia Global Immersion Program Shanghai and thought I’d repost a review of the essential China Shakes The World that I read on my first trip to Beijing in 2008.

Napolean once said “let China sleep, for when she wakes, she will shake the world”.

My personal China awakening (late to the party as usual) happened on my first trip to shanghai last year where I celebrated my thirtieth with some close friends. walking down the pedestrian section of nanjing road, i looked around and it suddenly occurred to me that the rest of the world could have perished at that instant, and China would have barely noticed. (it was a feeling rather than a thought). I have barely stopped thinking about China since.
I spent july living in Beijing’s Haidian student district on an introductory Mandarin course and then joined John Shoaf‘s pre-MBA Columbia World Tour in Shanghai. Living in China for a few years is firmly on my life game plan map, in the meantime i am trying to learn more about the place.

China Shakes the World: A Titan’s Rise and Troubled Future — and the Challenge for America
James Kynge, former china bureau chief of best English language newspaper in the world (The Financial Times), won the FT / Goldman Sachs business book of the year award in 1996 with ‘China shakes the world’ which is a superb, concise introduction to how and why china is shaping our world.
The first half tells the condensed history of China’s post-cultural revolution rise and illuminates its leading position during much of the last six thousand years.
The book starts off recounting the mysterious disappearance of manhole covers all over the world (with plenty of reports of unsuspecting pedestrians falling into the suddenly-there holes from Mongolia to Montreal) as a signal of when the direction of the world – China relationship switched: the view of china flipped from how the outside world was changing china to how China was affecting the rest of the world. China’s voracious appetite for almost every conceivable resource including the scrap metal that those manholes were destined to become was just one signal that the causal direction was switching.
James has plenty of engaging first-hand accounts from his two decades living in china through which it often seems we are witnessing China’s economic transformation unfold through his eyes.
some of the major themes / ideas that run throughout include:

• Businesses everywhere are finding it harder to compete (manufacturers in particular), the sustainability of europe’s welfare state model is in question as the industrial base there is hollowed out.
• China out-competes and out-capitalizes everyone, especially America.
• Chinese possess the impressive combo of intelligence and second-to-none work ethic.
• China through lowering the cost of goods and its insatiable appetite for US treasuries (in part to manage its currency) has fueled the low-iinterest rate driven housing boom and general drive for yield that has resulted in the current sub-prime, credit-crunch, free-fall dollar mess we’re in.
• 400 million people have been lifted above the poverty line over the last 28 years of above 9.5% economic growth.

A could be briefer! summary of some of the book’s chapters:

Rags to Riches.
Kynge recasts the economic revolution that started with Deng Xiapong’s (who famously said “to be rich is glorious”) reign (after the madness that was mao’s cultural revolution) as one based on the creative disobedience of china’s local governments rather than the top-down implementation of a genius Xiapong vision (which is closer to the official line). Deng’s genius lay in his strategy of running with whatever seemed to be working (i.e. creating jobs). we follow China in the 80s and 90s as it takes the initial steps towards becoming the world’s workshop. it’s a time characterized by an impressively enterprising private sector scrambling through post-communist bureaucractic loopholes, aided by subsidized capital, power and water.
those who ‘got rich first’ were often the unemployed or unemployable (who had no choice but to become entrepreneurs) which made for some surprising characters filling china’s rich list lists a few decades later (former convicts, peasants, etc).

The Future is the Past.
Kynge attacks the historical determinism widely prevalent in today’s China that its superpower status is inevitable; after all the country has laid claim to that mantle for much of the last few thousand years.
he questions whether China’s status truly was as strong as is often claimed. He opines that the Tang dynasty (800AD) was the country’s peak (and not unrelated, also its most open period) and that China had been in a state of relative, per capita decline through the end of the cultural revolution.

Most of the chapter takes place in Chongqing (once called Chungking), the contemporary equivalent of Chicago circa 19th century; Twain wrote “…astonishing Chicago, a city where they are always rubbing a lamp, and fetching up the genii, and contriving and achieving new impossibilities. It is hopeless for the occasional visitor to try to keep up with Chicago–she outgrows her prophecies faster than she can make them. She is always a novelty; for she is never the Chicago you saw when you passed through the last time”. hg wells wrote of an “unwholesome reek”, “a dark smear in the sky”, he found it “one hoarse cry for discipline”.

China is following the path trodden by America in the 19th century, or Japan post-1950, but the sheer scale and speed of its trajectory puts it in a class of its own.
Kynge talks about the ‘compression of developmental time’ when describing the unrivaled urbanization taking place. and with 700 million still living on less than 2$ a day, it can still count on pre-industrial revolution wages to maintain its competitive edge for the forseeable future.
linteresting, china studies much from america’s own rise, and models its highways, railroads, infrastructure on the us (learning from its mistakes of course and leap-frogging straight to the 21st century).
this is the magic of china – it is replaying out the birth of a great american nation but on a scale that dwarfs it.

Population Paradox.
Kynge discusses how the lure of a billion person market often masks a highly fragmented and obliquely protected domestic market, but the foreign investments continue regardless.

• Numbers hold a special, magical place in chinese culture (as we witnessed with 8.08pm opening ceremony on 080808).
• China takes a super-long-term approach to things: ZhouEnlai, Mao’s premier, when asked whether the French Revolution had been a success, replied without irony that it was too early to tell..
• China may grow old before it grows rich (thanks to the draconian one-child policy).
• Its famous lack of respect for intellectual property.
• Many chinese ventures are unprofitable and propped up by state banks (the state prioritizes jobs over profits, and
• China’s high savings means there’s is plenty of liquidity).

China goes to Europe.
James visits several cities in europe to see first hand the crippling changes that china’s matchless competitiveness has wrought on the crumbling european industrial hinterland (steel mills in germany, clothing factories in italy etc).
If Prato, a city that has been at the center of the global fashion textiles industry since the Medici’s, is unable to stand up to the chinese competition that starts with manufacturing and works its way up the value chain, in time buying brands, technology and skills, what does that say for the rest of europe and its welfare state so painstakingly put together after world war ii?



Image by shehab.hamad via Flickr

America bought and sold.
Takes us to average america to show first-hand how the country’s middle is being hollowed out (middle class, middle america, mid-sized businesses) and sets the scene for a possible future where the politically critical middle class turn against further globalization. the key idea here is that china started out at the bottom of the global value chain – manufacturing – but is moving higher and higher up much faster than a lot of people realize. although china is spending more and more on r&d, it still significantly lags the us on this front, but it is increasingly simply buying its way up the value chain (buying brands and the ip of companies bankrupted by china’s competitiveness).

Not enough to go around.
The mismatch of resources (in part due to China’s inefficient, wasteful use of its geological assets) and the size of its population has meant the environment has been an incontestable loser of china’s magnificent rise. but as kynge notes in the book’s final pages when tempering the possibility of a military clash between the US and China, pragmatism usually wins over at least in the short-term in china and as the environmental costs to china continue to be felt, action will probably be taken. in deed the SEPA profile seems to have risen noticeably since the book was published.

We also learn about the CNOOC v congress battle, and that the commodities boom kicked off when China joined the WTO – probably not coincidentally. also, the yangtze river is running dry!

Corruption and inefficiency are to blame for a lot of this (as well as a philosophical disrespect for nature).

Collapse of Social Trust.
China has a rich philosophical history (we learn about the concept of ren- roughly benevolence) but as mencius said in his bull mounatin parable (on ren, human goodness):

“The Bull Mountain was once covered with lively trees. But it is near the capital of a great State. People came with their axes and choppers; they cut the woods down, and the mountain has lost its beauty. Yet even so, the day air and the night air came to it, rain and dew moistened it till here and there fresh sprouts began to grow. But soon cattle and sheep came along and browsed on them, and in the end the mountain became gaunt and bare, as it is now. And seeing it thus gaunt and bare, people imagine that it was woodless from the start.”

Social trust is being eroded at an alarming rate, evident in

• News with bonus (pr companies customarily bribe journalists to print stories).
• the emergence of 100,000s of private detectives a job that did not exist just over a decade ago.
• state corruption has lead to HIV infecting one million peasants and orphaned 100,000 children.

Communism vs Democracy.
Kynge: “the main problem with China’s political systen is that it does not permit the checks and balances necessary to supervise and regulate a capitalist society”
some personal thoughts: i believe in democratic in principle (checks and balances, efficiency, accountability, etc, legitimacy), but apart from police and military states that rule completely by fear and intimidation (saddam’s iraq, iran, egypt, etc) there is an invisible social contract between party and people in non-democracries.
the lack of legitimacy conferred by elections if anything drives regimes like china, singapore and the uae to work especially hard to appease their populaces (and you can’t help but be impressed with these systems’ efficiency- beijing’s pre-olympic transformation could only have happened in this context, india would fail given twice as long).
On balance, the loss of efficiency inherent in democracy is a worthwhile sacrifice in my opinion, but it needs renewal i think.

Can we be friends?
‘Waishi’ or foreign affairs in china often blurs the boundaries between friendship of individuals and that of states when it comes to achieving goals.
Chinese schoolbooks teach that the 109 years leading up to the cultural revolution involved attackis and fireign meddling by the US, Japan, Russia, Britain and France without distinguishing between then and now (this will be unsurprising to anyone who grew up in the Middle East where the West, US, and Israel are given similar treatment) which is obviously unhelpful in building sincere fruitful relationships with foreigners.

The state uses nationalism and its ability in returning international respect and prestige to china to build its legitimacy amongst its people. but this brooding, sub-surface xenophobia is difficult to control (evidenced in the street’s reactions to the US bombing of the chinese embassy in belgrade or the recurrent anti-Japanese demonstrations)

We are entering a new era of international politics defined by the geopolitics of scarcity, Kynge outlines a very real possible scenario of heightened military showdowns between the US and China but ends the book on a more hopeful note extolling China’s pragmatism (at least in the short-term) as a characteristic that could lead to the unprecedented peaceful rise of a superpower.

my (more worriesome) thoughts on this at the moment are that key differences between the japan and german post ww-ii rises including:

• The commitment to china’s (played down) military build-up.
• Size!
• Sustained domestic pressure to grow (they need 24 million jobs a year, and must feed the increasingly rich and decreasingly agrarian population).
• and China’s is just as xenophobic as everyone else it unfortunately.

A must read for anyone remotely interested in what our future will look like.

I will have to add the 30million bare branches expected in China by 2020 to the list. Figuring out what to do with that many frustrated, un-marriable men could produce some truly ugly incentives.

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There are times when you feel close to the central conversations and conversationalists shaping our world during the Columbia MBA.

Shang-Jin Wei introduced us to the theory he is putting forward to explain the global savings glut that has shaped so much of our modern times during our first class in Shanghai on the Global Immersion Program. The common narratives incorporate China’s weak safety net, post-Asian financial crisis conservatism, oil booms, Confucius culture and more. Professor Wei claims that the most influential driver of increased savings has actually been the wildly divergent male to female ratios that many parts of the world have been experiencing over the past couple of decades. With perfect timing, this week’s Economist, coinciding with International Women’s Day, quotes professor Wei’s research in its fascinating Gendercide cover report.

(The Gendercide + Economist image search is censored here in China so this is the best jpg i can use!)

Some of the consequences of the skewed sex ratio have been unexpected. It has probably increased China’s savings rate. This is because parents with a single son save to increase his chances of attracting a wife in China’s ultra-competitive marriage market. Shang-Jin Wei of Columbia University and Xiaobo Zhang of the International Food Policy Research Institute in Washington, DC, compared savings rates for households with sons versus those with daughters. “We find not only that households with sons save more than households with daughters in all regions,” says Mr Wei, “but that households with sons tend to raise their savings rate if they also happen to live in a region with a more skewed sex ratio.” They calculate that about half the increase in China’s savings in the past 25 years can be attributed to the rise in the sex ratio. If true, this would suggest that economic-policy changes to boost consumption will be less effective than the government hopes.

Professor’s Wei’s thesis is that the increasing male to female ratios (which according the Economist is due to cheap prevalent ultrasound technology, shrinking families and gender bias) have encouraged higher saving levels as sons’ parents must vie for the limited pool of potential brides. Professor Wei in a recent Forbes op-ed had this to say:

The resulting pressure on the marriage market in China might induce men and parents with sons to do things to make themselves more competitive. Increasing savings, mostly by cutting down on the family’s spending, is one logical way to do that. Wealth helps to increase a man’s competitive edge in the marriage market. Ironically, increased savings does not change the total number of men who get married in the aggregate. In this sense, the increased savings is socially inefficient. However, from an individual household’s viewpoint, when the competition for a marriage partner is tough, it cannot afford to save less than its competitors. I call this effect “keeping up with the Zhangs.”

Professor Wei goes further still, claiming that the ratios can also help explain regional differences in entrepreneurship and appetites for hardship. We have heard him present his research findings to a few different audiences here in Shanghai and it looks like he has some work to do in changing general consensus. It seems to make a lot of sense to me, the only question is how big of a factor is the sex imbalance relative to the competing explanations.

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• International Women’s Day Marked Around the World (videocafe.crooksandliars.com)

Arif Naqvi, Founder and CEO of the Dubai’s premier Private Equity firm speaks at CBS Tuesday March 23rd, Uris 142, 12:30pm. Arif is a phenomenal speaker and a renowned investor. He will share stories from his career as well as discuss his view of private equity and business in emerging markets. Space is limited.

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