I was never much convinced by the cultural argument as to why Japanese/Asians/Iberians/Germans/Latin Americans/Muslims/anyone in a country that isn't currently a liberal democracy. Generally it seems to hold true until the repression slackens or is broken and the people take more control. To me, the primary reasons the Chinese state and companies can exploit people so effectively are 1) repression of dissent and 2) the fact that factory work is still an improvement on life as a peasant farmer. We'll see what happens when this reserve army of labour dries up and the industrial workforce becomes more settled.
In the West, our leaders like to talk about how small businesses drive the economy, create employment and will lead us out of recession. China is a big f**k you to this idea. Somehow economists and politicians seem to have forgotten about economies of scale. I suspect its an attempt to reconcile the conflicting beliefs in a well-functioning free market and the overwhelming fact of economies of scale, that in most areas, large organisations dominate. Developed economies have also staked a lot on science, technology and creative industries, with their 'intellectual property'. They've attempted to build extensive legal systems to protect this intangible property, only to find themselves faced with a major country that has scant regard for those principles. (Not to mention that their own populations are pretty dubious about them.)
There was an article in the NYT a while back about why Apple manufactures in China. What was really interesting about it were that most of China's strengths were things most people here would regard as unappealing - huge scale, great control by corporations over workers, tight corporate-government links.
I'm not sure any of this really links in to GGS; I think the book's theory stops applying once the world is sufficiently integrated (those guns, germs and steel have spread across it). That's the generous view, at least. The harsher view is that the fact we can't usefully apply Diamond's theory to modern times is because close up we see that things are really driven by complexity and chance and not explicable by any overarching theory.
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