NANJING, June 9, 2002 — For two hours this evening, I lectured, cajoled, answered questions and enjoyed the company of 300 students at a suburban campus of Hohai University. Despite the hot, crowded hall and lack of air conditioning, the audience was happy and excited and offered a special burst of applause as I opened in my crude Chinese: "Tong xuemen nimen hao!" (Hello, students!)

My theme was the perils of China's economic development and I began with a riddle borrowed and adapted from Cornell Professor Robert Frank in his Choosing the Right Pond:

One late afternoon, Bob and Ray, two fishermen in Alaska, were getting ready for bed. They were half-undressed, having removed their shoes and outer clothes. Suddenly, Bob looked up and saw a huge grizzly bear only two hundred yards away. The bear growled fiercely and appeared ready to attack. Ray quickly began putting on his running shoes. Bob said, "Why are you putting on your running shoes? You know you cannot run faster than a grizzly bear." Ray replied, "I don't have to run faster than the bear."

What did Ray mean by his reply?

I asked the students to explain Ray's assertion and one smiling man correctly said that Ray meant that he will escape if he outruns Bob, who will be devoured. There was an eruption of appreciation which increased as I threw a small chocolate bar to the clever student.

Most of the audience discerned the connection between the grizzly bear story and the development of competitive markets in their country.

The thrust of my remarks began with a brief discussion of several dangers in China's development. For example, China ranks 121st among nations in water available per capita. There will likely be a crisis in water availability in a few years. Furthermore, the Americanization of China, with fast food from McDonald's, Pizza Hut, and Kentucky Fried Chicken, is adding weight to formerly lean bodies. I asked the multitude to look around the hall at the healthy bodies of their classmates and I pointed out that by contrast, 30% of American children are obese, as are many adults.

I then presented an excoriation of so-called defense expenditures by China ($15 billion) and America ($325 billion). I expressed the hope that China will not attempt the futile task of trying to catch up to the U.S. in high-tech munitions. The former Soviet Union illustrates the point.

Time then for another familiar riddle illustrating what, in economics, is known as the "zero-sum game."

Chinese soccer teams do not like to play games at night even though, of course, there are strong lights to brighten the field. When someone asked why the teams do not like to play at night, one of the team managers said, "It's because most teams lose their games when they play at night."

Is this a good answer?

Through the clamor, a young woman shouted the key to the riddle: for every losing team there is a winning team, so it is impossible for there to be more games lost than won. I flung another chocolate and the crowd cheered. The economic idea of a competitive zero-sum game seemed to be grasped by all. Like games of poker, the net winnings are a zero sum; what one person wins, another loses. (Unlike the stock market where all can win and lose!)

I saved my heaviest rhetorical artillery for an attack on what is a disastrous Chinese policy of promoting automobile production and widespread car ownership. The government in Beijing has proposed increasing family ownership of autos from 20% to 70% in ten years' time. Fees and import taxes are to be reduced by up to 50%. China now has only five million private cars whereas the U.S. has 132 million. Is China headed for a society with 500 million autos?

This absurdity neglects the facts of Chinese life. Although China's area is slightly larger than that of the U.S., only 20% is arable land. And, as desertification increases and broad concrete highways are built, this percentage will decline rapidly. Moreover, the apartment buildings that dominate China's cities have no parking space. (In New York City, parking spaces are rented for $600 a month.)

China already suffers pollution from the burning of fossil fuels. Soon, as in America, hundreds of thousands of productive hours will be wasted as workers sweat out traffic jams. The dispersal of population, made feasible by autos, will raise the demand for a never-ending cycle of road construction and increased traffic. Like the U.S., China will be importing billions of dollars worth of oil annually. We also know of the 40,000 deaths caused every year by automobiles in the U.S. We know further that autos are the principal cause of deaths of children. Finally, it may be emphasized that at present the Chinese have a most efficient transportation system, using feet, bicycles, taxis, motorcycles, trains, buses, and airplanes.

In response to this critique, an astute young woman pointed out that the auto industry will employ millions of workers, an important consideration in a country where millions of unemployed farm laborers migrate to the cities every year.

I replied that employment in the manufacture of bicycles, motorcycles, taxis, buses, and trains will be adversely affected. America's passenger rail and bus systems were largely de-railed by the automobile. I noted that Switzerland, Holland, Belgium and other countries have fared well without the blight of an auto industry. Finally, most European countries discourage driving by pricing gasoline at or above $3 per gallon, while China and the U.S. have prices of about $1.50. As a result, Europe has preserved its excellent rail and bus systems.

Other questions raised by the audience touched upon America's foolish alliance with Taiwan, yielding a great uproar expressing agreement with my comments. The number and gender of my offspring were also asked about. (Would I have liked a daughter along with four sons already begotten? Yes, and that would help me understand the mystery of women. But a powerful man like me can only have sons! More uproar.)

The second hour devoted to questions ended, and the students wanted more time despite the sweltering heat. I demurred.