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Debating high tech's China challenge

The PFF's Adam Thierer squares off with the Cato Institute's Jim Harper over how tech companies should engage China.

In light of recent news reports about the cooperation of some companies in censorship by the Chinese government, Adam Thierer, senior fellow and director of the Center for Digital Media Freedom at The Progress & Freedom Foundation, and Jim Harper, director of information policy studies at the Cato Institute, recently engaged in a dialogue about the effectiveness and propriety of U.S. engagement with China. They discussed the broadening of human rights--speech rights in particular.

An abbreviated version of their e-mail exchange follows. For the full conversation, click here.

Thierer: I have been struggling with U.S. corporate engagement and investment in China. In particular, I wonder if greater engagement by U.S. companies will really help achieve meaningful reforms for China's repressed citizenry.

I have always argued that investment by U.S. technology companies could help break down barriers to economic and social freedom. However, reports from the front have not been good. It seems that the Chinese are just as repressive as ever.

I'm worried that a silent quid pro quo may be at work here.
--Adam Thierer

We know that American corporate technology leaders have assisted Chinese officials when they sought to repress speech and dissent. Tell me, are you comfortable with this?

Harper: Not really. I was very concerned when I learned that Google had come to an agreement with the Chinese government so that their service would not be blocked there.

But I have come to believe that the best option for a company faced with this dilemma is to accept the ugly conditions some governments put on doing business in their countries.

There is strong evidence that refusing trade doesn't help anybody. The U.S. trade embargo toward Cuba has been a dismal failure.

More importantly, if you give them the technology and communications tools, the Chinese people will evade government controls. You don't have to use words like "Falun Gong" or "free speech" to communicate about liberty and public issues.

Thierer: You make many good points. Nonetheless, change is coming about much more slowly than I would have hoped.

I'm concerned with factors that could continue to hold back or slow this progress toward greater political freedom. Many high-tech companies doing business in China want to see the Chinese government make the business environment more hospitable. Greater intellectual property protection is often at the top of that list.

I'm worried that a silent quid pro quo may be at work here. The firms want stepped-up enforcement against piracy while the government desires to crack down on dissent. Is there an implicit deal here?

Harper: That's a very interesting idea. And it brings me to an important weakness in my support of engagement, even under ugly conditions: The last thing I want companies to do is be effective in their efforts.

I don't think freedom should be a zero-sum game.
--Jim Harper

In labor relations, there's a protest the labor side sometimes uses called "work-to-rule." Employees punch in and leave exactly on time, follow every safety rule and take their full allotted coffee breaks. Everything is exactly by the book, and productivity goes through the floor.

I'd like to be confident that the companies engaging with despotic governments are working to rule, doing the absolute minimum. But I'm not.

That's why I think objecting to this stuff, as Reporters Without Borders has done, is appropriate. Companies like Microsoft, Google, Cisco Systems and Yahoo should be called out. They should take a PR and profit hit when they do this.

Thierer: As you know, Reporters Without Borders has gone further and proposed regulation to address "the ethical lapses displayed by certain Internet sector companies when operating in repressive countries." They have been applying pressure but say nothing has changed.

Now they propose that Congress and the Department of State push a code of conduct. If that doesn't work, they think legislation should disallow U.S. companies from providing services in those countries and forbidding selling them surveillance or other software.

What are your thoughts on this proposal?

Harper: Everyone supports Reporters' Without Borders' goal, of course, which is freedom. But their goal isn't total freedom: It's just press freedom. They would reduce the freedom of Internet businesses in the United States to advance a press freedom strategy in certain other countries (one which I think doesn't work).

I don't think freedom should be a zero-sum game like that. I want more freedom for everybody, which is part of why I come down on the side of the engagement strategy.

People have plenty of power to persuade others and to persuade companies. The test of their commitment is whether they will do the work that brings others to adopt their view and share their mission.
--Jim Harper

You mentioned that engagement with China is an arguable ethical lapse. Do you agree? This is about as appealing a case for corporate social responsibility as there can be. But Milton Friedman said in 1970 that the social responsibility of the firm is to increase profits. Should technology companies rein in the profits they return to shareholders and the employment they give workers to be socially responsible?

Thierer: A corporation's first duty is to maximize its value for shareholders. But certain issues rise to a different level. In World War II, companies sold various chemicals and munitions to the Nazis. I wouldn't equate the sale of computer software and hardware with the sale of deadly weapons and chemicals. But where would you draw the line?

I assume you would agree that the sale of deadly items would qualify for special regulation. But I take it you would never support anything beyond that? What if the company has a long track record of marketing speech-restricting tools to repressive regimes across the globe?

Harper: A country can regulate or ban domestic companies' trade in munitions because the geopolitical interests of nation-states trump the economic interests of companies and people.

American technology companies should play a little hardball with repressive regimes.
--Adam Thierer

Dual-use technologies are a closer call--products with both peaceful and military uses. Here we're talking about technology and services that have both beneficial-communicative and harmful-censorial uses, but they have no particular military uses. The interests of the U.S. are not at stake, just the interest of a faction in directing the U.S. government to advance its aims.

Capturing and using government power is far too easy and far too appealing to too many. It's better for people who object to corporate practices to use their own influence to affect it. No company lives in a bubble. They buy inputs of all kinds: transportation, power, paper, advertising, courier services, hardware, software. If a company can't be persuaded directly to stop an objectionable practice, its suppliers can be pressured to stop providing the inputs.

I fully respect anyone who disagrees with me on the substance of my argument--that trade in technology has net benefits for the Chinese people, even if some traders collaborate in censorship--that is, if they advance their argument through persuasion. People have plenty of power to persuade others and to persuade companies. The test of their commitment is whether they will do the work that brings others to adopt their view and share their mission.

Thierer: I guess I would still classify myself as being in the "engagement is good" camp, but I'm uneasy about it. You argue that the "interests of the U.S. are not at stake, just the interest of a faction in directing the U.S. government to advance its aims." Isn't spreading democracy and freedom of expression a U.S. interest? If some of our most respected technology companies are facilitating the repression of dissent and speech, doesn't that counter our national interest?

American technology companies should play a little hardball with these repressive regimes. I will continue to oppose efforts to legally force them to do this--but I hope that they will consider taking a different approach to engagement with China and other repressive regimes.