For Chinese Power Game, a Changing Equation

From Sebastian Veg, Research Professor at the School of Advanced Studies in Social Science in Paris:

By shaking up the unwritten rules that have prevailed since Deng Xiaoping consolidated power, Xi is taking a political risk. In exchange for the immunity that PBSC members were granted, they were expected to retire at the end of their term, and to remain loyal to collective decisions. If immunity is denied, both of these tenets may begin to be questioned. Why should powerful leaders retire if they can then be targeted? Why should they accept decision by consensus if they can later be made to pay the consequences as is alleged in Zhou’s case with the vote on Bo? They may be better off spending their terms gathering compromising material on other colleagues. Xi no doubt understands the risk, and believes it must be taken because the Party’s legitimacy is in danger. However, by disturbing the carefully crafted institutional balance, he runs the risk of overplaying his hand.

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Charles Munger: A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business | The Big Picture

In a bureaucracy, you think the work is done when it goes out of your in-basket into somebody else’s in-basket. But, of course, it isn’t. It’s not done until AT&T delivers what it’s supposed to deliver. So you get big, fat, dumb, unmotivated bureaucracies.

They also tend to become somewhat corrupt. In other words, if I’ve got a department and you’ve got a department and we kind of share power running this thing, there’s sort of an unwritten rule: “If you won’t bother me, I won’t bother you and we’re both happy.” So you get layers of management and associated costs that nobody needs. Then, while people are justifying all these layers, it takes forever to get anything done. They’re too slow to make decisions and nimbler people run circles around them.

The constant curse of scale is that it leads to big, dumb bureaucracy—which, of course, reaches its highest and worst form in government where the incentives are really awful. That doesn’t mean we don’t need governments—because we do. But it’s a terrible problem to get big bureaucracies to behave.

via Charles Munger: A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business | The Big Picture.