Feldman's Faves: December 1, 2025

GOOD MORNING EVERYONE

First and foremost, a HUGE congratulations to our very own Christina and Owen on their well deserved admissions to the partnership.  Our partnership will be better and stronger with the two of you joining in January!

Shocking that we are now into December.  2025 has been an incredible year at Goodmans. Every single person at the firm has busted their butt all year long, which is VERY much appreciated. It will be fun to celebrate our great success (among many other things) at our party next week – I hope you can all make it.

On the theme of greatness, please join me in wishing Jonathan a very happy birthday this week.

For those of you who haven’t seen it and might be interested I am attaching last week’s SCC Lundin Mining decision. The short story is that this decision could impact the way our issuer clients think about the nature of and the timing of disclosure of changes that might be material in order to mitigate class action risk. The implications of this decision for our practices could be significant (at least initially) as people inevitably overreact in trying to figure out the right balance here. If anyone wants to discuss this decision and its implications I am always available to get your perspectives (even Neill’s…). 

Finally, just a reminder of this morning’s BAGEL BREAKFAST (thank you Alex, as always).

This week’s theme is the work of Dan Wang (with not the best message for us lawyers  -  but oh well. That said, think our LRT vs pretty much any infrastructure project happening in China right now and you get the picture).

BREAKNECK By: Dan Wang – Dan Wang is a Chinese born Canadian who has lived and worked in China, Canada the USA and has spent his life trying to understand how these economic systems operate.  His main thesis is that China is run by engineer and the US (and I suppose Canada) by lawyers. These societal mindsets impact how people live their lives and how sh$t gets done. In Breakneck, Wang goes deep into his analysis and argues (not surprisingly) how each society could benefit by incorporating elements of the other. As one reviewer notes, “ There are many wonderful things about Breakneck. The prose is excellent and engaging. I appreciate that the book feels both realistic and optimistic — despite the clear-eyed look at the pathologies of both China and the US, there’s a constant, quiet, undertone that “this could change.” (This could be me projecting.) One positive vision that struck me in particular is the possibility for America to see itself not as a static “developed” country but as a permanently developing country, always striving. It’s the national version of my refusal to be a “grown-up” because I always want to be growing and changing. (Being an adult is fine.) We share several aesthetic preferences: for building physical things; against financialization run amok; for the importance of process knowledge. Uncomfortably, it seems that we also share those aesthetic preferences with Xi. But I do think there is a nugget there that we don’t talk enough about: at the end of the day, we want to be part of Great Things. What it means to be Great is an aesthetic choice. It’s not something you can put a number on, despite the inclination of engineers (and economists). The metric-resisting nature of Greatness may be at the root of many of the engineering state’s pathologies that you flag. When they’re in charge of creating a new product, engineers frequently build towards a metric or “figure of merit”, but then change it when maximizing it is no longer driving towards a better product. The metric change inevitably takes longer than it should, and it’s rarely discussed whether maybe it’s more productive to not drive towards a single metric in the first place. (I’ve seen this first-hand as one of those metric-maximizing engineers). This approach can work for products and potentially infrastructure, but it’s disastrous when applied to people as your examples of COVID and the One Child Policy highlight. Law freezes those numbers in place for better or worse.

Of the elements you cut short to leave us wanting more, I wish in particular that you pulled further on the thread about process knowledge. Process knowledge is the real reason why I care about manufacturing capability in the US. It’s not about jobs: if we tie manufacturing capability to jobs, we will become a mausoleum just as much as Europe. Progress comes from decoupling output from the number of people involved in it. Manufacturing is not even about defense: the United States’ territorial sovereignty would be secure even with a tenth of its current might. No — I think manufacturing is important because I want the United States and its people to be maximally agentic not just on the internet but in the physical world as well (and I suspect you might too, Dan). I want the US to be the place where people invent, create, and improve physical things. All that requires process knowledge.Part of my brain wants to extend the “Lawyer” and “Engineer” dichotomy; after all, you have said to me that good groups come in threes! Merchants also seem to dominate much of American society — our obsession with profit maximization, exaltation of entrepreneurs, and financialization of everything. Of course, once you allow for one more than two, why not more? Scientists, Economists, Historians, and others all have their own particular pathologies. And ultimately lawyers do dominate all of them.There are some things you hinted at quietly in the book — especially critiques of dominant American mindsets — that I want to say out loud. (These are, of course, my interpretations and not a claim on your beliefs.)

• Stockholder (stock holder, not stakeholder) capitalism isn’t clearly the optimal form of corporate governance. You note the gap between China’s mediocre stock market returns and massive GDP growth. Yes, markets are an amazing coordination technology. But markets are not directly equivalent to a system where corporate entities are largely controlled by a small-ish set of people who want to see a single number monotonically go up on relatively short timescales.

• Perhaps not all industries are not created equal. In the US, the default is that as long as it does not break a law, all dollars of revenue and profit are equivalent. Yes, it is not great for freedom or flourishing that the Chinese government can insta-crush industries like social media or tutoring at a whim. But even Adam Smith suggested that there was productive labor that adds value embodied in a material good and unproductive labor that leaves nothing valuable that can be stored. This idea has largely been abandoned by economists, but I think there may be something to it. Different industries do unlock different branches of the tech tree and shape the capabilities, skills, and mindsets of a people.

• On-paper wealth does not translate directly to flourishing. All things held equal, you certainly want a larger per-capita GDP! But even top-10% wealth in one of the wealthiest countries in the world cannot buy you beautiful and safe public spaces, functional airports, or the ability to build things quickly.

But even if these facts are true, they are not an argument for the US government having more control over the economy. Instead, it raises the question “what does counterbalancing raw capitalism with American characteristics” look like? You’ve said that you hope the book engenders curiosity in Americans about China. For me, a lot of that curiosity takes the form of “how can we copy the good outcomes – the ambition, physical process knowledge, and ability to build awesome shit – without adopting whole-cloth aspects of an authoritarian state?” Both because of your poignant warnings about the human consequences and because I don’t think Americans could pull it off. I worry that the majority don’t share that curiosity, regardless of political leaning: whether they believe “the way we do things in America doesn’t need to change; the Chinese system is unsustainable and will collapse the way the Soviets did,” “We need to start engineering industries the way the Chinese do,” or just “America is just doomed.”

Most of the time close language analysis gives authors far too much credit. But knowing the amount of intentionality you put into your writing and your stated experience analyzing Xi’s words, I believe that it is worthwhile to analyze the specific words you use in the following quote, which captures the thesis of the book: “China is an engineering state, building big at breakneck speed, in contrast to the United States’ lawyerly society, blocking everything it can, good and bad.” There is a sneaky asymmetry here that I haven’t seen anybody else flag: China is an engineering state while America is a lawyerly society. You’re highlighting what, despite other similarities, is a core difference between the two countries. What China does as a country is dominated by the state; what the United States does as a country is dominated by society. This distinction highlights why, despite how tempting it is for technocrats and politicians, it is foolish for the United States to try to achieve China’s building outcomes by directly copying many pages out of their playbook. The United States has (almost) always been a Lawyerly state. The majority of the founding fathers were lawyers. None were engineers. However, the US was once an engineering society. In the 1970s, however, society turned lawyerly — in no small part as a reaction to the state’s dalliance with engineering during the 40 year period from the 1930s through the 1970s. People used the lawyerly foundations of the state to shut down not just the engineering parts of the state, but the engineering parts of the society as well. This is the situation we find ourselves in today. Throughout the book you maintain impressive discipline to be incisively descriptive instead of annoyingly prescriptive. So the following conclusion is my biased gloss, not an attempt to put words in your mouth.

At its core, the American state is set up to stop people and entities from doing things. Originally, the nature of our lawyerly state was primarily directed at the state itself: using the power of lawyers to prevent the state from abusing power in the way that Britain had. A lawyerly state can be an excellent complement to an engineering society — setting ground rules that let the population’s natural inclinations towards ambition, agency, and mutually beneficial trade to unlock flourishing in ways that technocrats cannot even imagine. “I told you so!” De Tocqueville cries from his grave. But throughout the 20th century, the state’s scope expanded — often for at-the-time-good-reasons from world war to crippling depression to new technologies both mechanical and social. Arguably, classical liberalism arose in an environment that no longer exists. This shift was masked by the state trying its hand at engineering but once it reverted to its lawyerly nature, it now had vastly expanded scope to stop people from doing far more things than the founding fathers could ever have imagined. The expanded power creates a feedback loop with the lawyerly tendencies of society, allowing those who would rather nothing happen to impose their will on the rest of us. Reading between the lines, Breakneck hints that the way that the United States will flourish is not by copying China and attempting to become an engineering state (as is so tempting for many people across the political map). Instead, building with American characteristics is going to look like embracing the nature of our lawyerly state and figuring out how to adjust its rules and rethink its role so that we can be an engineering society once again. The way to start building in America is for the state to get out of the way. Let them cook, as the kids say.”  As a lawyer, its hard for me to take issue with the fact that a little more emphasis on engineering in Canada and the US would not be a terrible thing (that’s right LRT, I’m talking about you….)Here’s a good review from Foreign Affairs –https://www.foreignaffairs.com/china/real-china-model-wang-kroeber

Freakonomics Radio  - China Is Run by Engineers. America Is Run by Lawyers – If you would like to learn about this stuff without reading the book, this PODCAST provides a pretty good synapsis.  Here’s an excerpt from the PODCAST itself, “In his new book “Breakneck,” Dan Wang argues that the U.S. has a lot to learn from China. He also says that “no two peoples are more alike.” We have questions.   SOURCES:Dan Wang, research fellow at the Hoover Institution at Stanford University, author of Breakneck: China's Quest to Engineer the Future.  RESOURCES:Breakneck: China's Quest to Engineer the Future, by Dan Wang (2025).The Anaconda in the Chandelier: Writings on China, by Perry Link (2025)."Is the U.S. Ready for the Next War?" by Dexter Filkins (The New Yorker, 2025)."How smartphones made Shenzhen China’s innovation capital," by Dan Wang (2016).How China Escaped the Poverty Trap, by Yuen Yuen Ang (2016).The Art of Not Being Governed, by Jame Scott (2009).  EXTRAS:"The Engineering State and the Lawyerly Society: Dan Wang on his new book 'Breakneck,'" by the Sinica Podcast (2025)” https://podcasts.apple.com/ca/podcast/freakonomics-radio/id354668519?i=1000727499242

Thank you for your ongoing engagement and participation.

And remember to stay safe, stay healthy and to docket daily.

Jon