One of the dumber memes online. Kopel: U.S. Web firms aid in repression.

Yahoo! is so enthusiastic to comply with "local law" - however tyrannical and unjust - that in 2002 Yahoo! signed the "Public Pledge on Self-Discipline for the China Internet Industry" (www.isc.org.cn/20020417/ca102762.htm). Thus, explains Reporters Without Borders, a Chinese Web user who runs a Yahoo! search query for a controversial topic such as "Taiwan independence" will "retrieve only a limited and approved set of results." If "you try to post a message on the subject in a discussion forum, it never appears online."

Google and Microsoft have also signed the so-called "Responsibility" code. After the Chinese government blocked Google in 2002, Google modified its Chinese search engine. Google maintains on its own servers a cache of various Web content, so a Chinese surfer previously might have been able to find forbidden content by using the Google cache, rather than reading the content directly from a banned Web site.

In June 2005, Microsoft admitted that it had imposed filters on its Chinese weblogs to block "forbidden words" such as "freedom," "democracy" and "demonstration."

The issue is being mindlessly spun as U.S. companies assisting Chinese repression. This is rubbish. They either comply with state regulations or they too are banned.

It is far better that the Chinese people have even limited access to major web tools than not have access at all. Yahoo, Google and Microsoft have done the wise thing. The Chinese government deserves all the criticism but in the end this won't matter. Access to the web will undermine them no matter how they censor content because it is the form not the content that is subversive. They aren't stupid. They know this too. Their objective is to slow change rather than prevent it and so avoid collapse. I wish the Chinese people well.

Update

This may seem far afield but I think it's a congruent thought.

Microeconomics focuses on the actions of individuals; it examines how individuals respond to incentives, as well as studies the various incentives that individuals in different circumstances confront. Gary Becker is a living example of a premier microeconomist.

Macroeconomics involves tracing out the unintended consequences of various actions and sets of individual actions. It studies the logic of the spontaneous, unintended order (or disorder, as the case may be) that emerges when each of many individuals respond to the incentives identified and classified by microeconomics. On this definition, Hayek is certainly one of history's greatest macroeconomists.

The Chinese censors are controlling some of the micro issues but can't control the macro issues. A changed order will emerge in due course though the consequences, I think, are not truly unintended. It is a managed transition rather than a collapse. They saw what happened to the Soviets.

Update:

The idea that the Chinese oligarchs want to avoid a Soviet style self punking and collapse isn't new or difficult to grasp. It has been widely discussed as a separation of economic freedom from political freedom for managed introduction. First economic freedoms are extended while political freedom is kept locked down. At some unspecified later time it is assumed by many that political freedom must follow, at least in the "'command-and-control', socialistic, Old European" sense, though it's an even older Chinese sense. Confucian Analects and all.

Looking at some examples besides the Russian Soviets may make the Chinese strategy clearer.

For the past eight months, however, Ukraine's economic policy has been nothing short of disastrous. Economic growth has plummeted from an annual 12 per cent last year to 2.8 per cent so far this year, driven by a fall in investment.

The blame for this startling deterioration must lie with the government's economic policies. By agitating for widespread nationalisation and renewed sales of privatised companies, the government undermined property rights. In addition, it raised the tax burden sharply to finance huge increases in welfare spending and public wages. Very publicly, Ms Tymoshenko interfered in pricing and property disputes, criticising individual businessmen. Chaos and uncertainty prevailed. This populist policy had little in common with the electoral promises of Viktor Yushchenko, the president, about liberal market reforms.

Political reform and populist mobs in the street may seem democratic and romantic, but it often leads to misery and economic collapse, which opens the door to the next dictator. Worse, populist revolt often projects revolutionary leaders into governance positions where they are incompetent, unable to switch modes from wrecker to builder. Ukraine is on the brink of disaster still.

Consider this discussion of Chinese mobs.

. . . everybody in China I've been communicating with over the past 12 hours thinks the real reason has to do with fear of the kind of thing depicted in the picture on the above right: smartmobs. This picture was taken by a blogger during the anti-Japanese protests (which occasionally turned into riots) last spring. The protests sprang up in true smartmob-fashion, mobilized by people on internet bulletin boards, mobile phone text messaging (SMS) and e-mail. . .

The Chinese government has very good reason to be scared of flashmobs and I very much doubt they'll succeed in preventing them in the future. Flashmobs could indeed bring the government down if they get big enough and out of control. But flashmobs can't incubate a generation of leaders capable of democratic governance. On the other hand, mobs are very good at crowning new demagogues to replace the old ones. After all.. that's how Mao came to power...

Mobs are mobs and they are never "smart". That meme tries to fluff up the idea of mobile communication as being somehow different than mob incitement methods of the past, but it's not, just a hand libel tarted up a bit. So, not smart, just wireless, and still a mob which is stupidity incarnate. Do the Chinese - does anyone - need a new demagogue?

Update:

A Chinese blog expresses related views.

The critics, mostly American, are pursuing their own domestic anti-corporate agenda; their complaints are of no relevance to anyone living in China.

If Yahoo! and the others packed their bags and left this country, freedom of expression would take a step backwards. By their investments in the Chinese Internet, foreign Internet companies have dramatically advanced freedom of expression for a quarter of the people on the planet.

Microsoft, Yahoo!, Cisco, Google etc. are forced into compromises when operating in China, but for every Shi Tao in jail, there are millions of people who have unprecedented access to information from around China and the outside world, thanks in part to those corporations.

This is why you almost never hear complaints about these companies from Chinese people, especially those who remember the pre-Internet age, when the average citizen could not even get hold of a copy of Time magazine.

To quote Li Ao:

You must not believe the Westerners' high-minded talk.

Update:

Another expression of the relationship between economic and political freedom. [via A&L Daily]

An important distinction in practice concerns the interaction between the economic and the political system. A democracy born in an open economic environment, with a well functioning market system, widespread foreign direct investment, and sizeable international trade, is likely to consolidate economic liberalism, stabilize expectations, and hence lead to more investment and faster growth. Conversely, if an economy is tightly controlled by the state, has protectionist barriers against foreign imports and capital movements, or relies on rents from exhaustible resources to obtain foreign currency, transition to democracy can be plagued by populism and struggles for redistribution, hurting economic growth.

Empirical evidence supports the idea that the success of a democracy depends on the openness of the underlying economic system at the time of political transition. In the post-WWII period, the more successful episodes of democratic transitions have been preceded by widespread economic reforms that extended the scope of the market and facilitated international integration. Examples include Chile and South Korea in the late 1980’s and Mexico in the mid-1990’s.

Conversely, when democratic transition was attempted in a fragile and closed economic environment, the outcome was much worse. This applies to the episodes of democratization in Latin America and the Philippines in the mid-1980’s, but also to Turkey in the early 1980’s and Nepal in 1990. The contrast between China and Russia also fits this pattern very well.

China first opened its economic system to the rest of the world, and only now is it thinking (a bit too slowly) about political reform. Russia instead jumped into democracy, and only then worried about replacing socialism with a market system. There was probably no other way to do it in Russia, but the Chinese path seems much more likely to lead to lasting economic success.

This does not mean that democracy is unimportant. But the sequence of reforms is critical for successful economic development, with economic reforms coming first. When an open and well functioning market system is in place, democracy has a much better chance to lead to lasting prosperity.

An important reason for this is that, in order to create a successful market system, the state must respect basic individual rights: the rule of law, private property, and the enforcement of justice. These fundamental rights are part and parcel of democratic government. But when it comes to economic development, these fundamental rights are more important than other purely political aspects of democracy, such as universal suffrage and genuine political competition.

This is how the Western world became democratic in the nineteenth and twentieth centuries. Economic liberalism came first, political liberalism later. But today’s young democracies have to do everything much faster. They don’t have the luxury of restricting suffrage to property owners, or to more educated citizens.

Nevertheless, we should remember the lessons of history. Political reforms are more likely to be successful if they are preceded by economic reforms. We should insist that Egypt or Pakistan improve their market system, apply the rule of law, and open their economies to international trade and capital movements. Allowing free elections and true political competition is also critically important, but this should follow economic reforms, not precede them.