Age(ing) of China

Ignorance is bliss, they say. Apparently this adage is from a 1747 poem by Thomas Gray. Who is Thomas Gray you ask? Well, refer back to the first sentence. At any rate we’re reminded of this old saying by the multitude of data and insights that are used in sports nowadays. Baseball strategy has been transformed the last decade by teams finally adopting sabermetrics and by new uses of spatial data information. The result is that there is less base running, balls in play, less risk taking and nearly all teams are using the same in-game strategies. In other words, it has dulled some aspects of what made the game great and interesting. So too in basketball. Teams increasingly understand a three-point shot is intrinsically more valuable than a two-point shot. Consequently, basketball games are increasingly a series of three point shots rather than a multitude of different types of plays, again dulling and destroying some aspects of what make the game great. This is increasingly true of many sports and many endeavors of life. We love data and we were into sabermetrics 30 years ago before it was cool. But perhaps it turns out that understanding things too well can in the end destroy them. The mystery of life is not something to take lightly. Ahh, but not international news and data. No, there ignorance is not bliss and so we bring you the Age(ing) of China, examine CEO’s worst fears and embrace the Department of Loneliness. It’s this week’s International Need to Know, stealing bases and posting up on our world’s diamonds and courts.

Without further ado, here’s what you need to know.

The Age(ing) of China

It cannot be said often enough in a world that believes otherwise, that things are not binary. It is not A or B, black or white, one thing is wrong and the other is right. Our world is more complicated than that. Two things can be true at the same time (or false). China is a great example of this. People want to pigeon hole it as either a catastrophe waiting to happen or as inevitably marching to greatness. The truth is, like almost any country, China has its assets and opportunities as well as liabilities and challenges. So even as we remind you today of its aging demographics, that does not mean we discount its continuing innovation and other assets. But China is getting old—it’s demographics currently are almost as old as the United States and if trends hold its demographics will shortly be older than the U.S. The latest figures show that China’s working age population (ages 15 – 64) has topped out at just under 72% of the population. Of course, given China’s size, that still means they have nearly a billion working age people. But, GDP only grows with increases in productivity and increases in working age population. If China’s working age population is no longer increasing, unless they buck the worldwide trend of weak productivity, China’s GDP growth will start to slow (whether official figures reflect this or not). In addition, the World Health Organization classifies a country’s population as “aging” when the percentage of people over 65 reaches 7 percent. Currently, 11.4 percent of China’s population is over the age of 65. China is still doing amazing things, but it also has some challenges, including its aging demographics.

What are you Scared of?

Every year the powerhouse accounting firm PWC (who accidentally brought us the craziest moment in Oscar history last year), conducts a survey of CEOs around the world asking them a variety of questions about business conditions in their countries and other markets. This year CEOs are more anxious than in the past. The whole survey is worth perusing but we will concentrate on the question of which threats CEOs are most concerned about. It varies tremendously by region. In North America, CEOs are most concerned about cyber threats and over regulation. Asia-Pacific CEOs, on the other hand, are most concerned about availability of key skills, the speed of technological change and terrorism. Both Western Europe and Latin American CEOs top concern is populism, which says a lot about both places. In the Middle East, the top concern is geopolitical uncertainty. In Africa, it’s social instability. We feel some of these answers are different words for the same thing. But, nonetheless it is an interesting insight into different region’s CEO’s mindsets. We end by noting that humans are notoriously poor at assessing risk, so take the CEO’s opinions with a grain of salt like La LA Land producers should have at the announcement of their victory.

Department of Loneliness

One of the modern day technophobia fears is that we are all alone too much. People don’t go out to the movies, the grocery store, the CD or book store. It can all be downloaded or delivered to your house, apartment or condo.  It is quite possible to never have to leave the four walls and a ceiling of your humble or expensive abode. Perhaps this is another reason why the U.K. felt the need to appoint a Minister of Loneliness. According to U.K. government figures, 9 million people in the UK are “always or often feel lonely.” That’s 15 percent of the population. In addition, “around 200,000 older people have not had a conversation with a friend or relative in more than a month.” It would be easy to mock the creation of a Minister of Loneliness—indeed it was our first instinct. But as our world increasingly resembles a Black Mirror episode, we refrain from such easy punches.

Wilco -The Lonely 1 (Solid Sound 2017)
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Keep an Eye on Djibouti, Paying Immigrants to Leave, a Good Day

During our knee surgery convalescence, we caught up on a fair amount of television, especially when we were on pain killers which dulled our ability to read. Pain killers also prevented us from creating a spreadsheet tracking the number of sexual harassers involved in the shows we were watching. We think and hope the number was small but certainly not zero. For instance, we caught up on the last two seasons of the masterful show, Silicon Valley (only one accused…so far)–to our mind the funniest, most spot on satire of recent years. In episode 7 of season 4, the legal rights of the song Walking on Sunshine by Katrina and the Waves plays an important role, with the allegation that Katrina–or perhaps it was the Waves, we’re not sure–ripped off the melody from an old Mexican song. Masterfully, at the end of the episode, a Mariachi version of Walking on Sunshine plays over the credits. And while we’d consider walking in front of oncoming traffic when the Katrina and the Waves song is played, this cover enchants us, which says something more bad about us than Katrina and the Waves. But we have nothing bad (yet) to say about surprising information out of Djibouti, remind ourselves about paying immigrants to go home and ask sincerely, “who is having a good day?”  It’s this week’s International Need to Know, providing, in the lingo of present day politics, a s***load of important information about our world, wherever and however we find it.

Walking On Sunshine – Mariachi La Estrella fe…
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Without further ado, here’s what you need to know.

Keep an Eye on Djibouti

We begin this week with a question: which country is host to more countries’ foreign military bases than any other. The perhaps surprising answer is Djibouti, which like a moth to light, a Kardashian to a camera, has attracted military bases from eight different, diverse countries. The U.S., of course, has one there, as it does in over 70 countries around the world. Old time European power France has a base there and Italy is building one. But so too does China, placing its first foreign military base in a country that is strategically located near shipping lanes and bridging north Africa and the Middle East. Japan also has its only foreign military base in Djibouti. India is interested in building one and allegedly Djibouti is wooing Turkey to build one. The country is both hedging their bets and using the bases as an economic development play. China, always interested and active in Africa nowadays, has built a new electric rail line from neighboring Ethiopia to Djibouti—Ethiopian trade accounts for 70% of activity through Djibouti’s port, a significant portion involving China. It’s a tiny place and I bet you haven’t thought about Djibouti lately or perhaps at all. But the world’s powers are congregated there which could lead to mischief, fun and amusement, perhaps all at the same time.  A place to keep an eye on.

    

Paying the Immigrants to Leave

Fear is a powerful emotion. Immigration has sparked fears across the Western World, including in Europe. A week after our racist U.S. president continued to say racist things about immigrants, we came upon data comparing how much European nations are paying immigrants to return to their home countries.  Yes, perhaps like us you’ve forgotten that a variety of European nations have been offering moola for their recent immigrants to go home, or in some cases to help them pay the costs to return home. Sweden is offering the fattest checks, up to 3050 Euros to head out of their country and back to their countries of origin. Spain and the UK are tied for second at 2000 Euros each, with Finland and Germany rounding out the top five. The full list is below for your perusal, especially if you’re an immigrant yourself and examining where you can get the best deal.  However, not all European countries were offering such monetary assistance. The Czech Republic, for instance, offers no financial incentives.

A Good Day

How is your day going so far? Well, we hope. If you are living in sub-Saharan Africa, Latin America or the United States, “you are more likely than people in other regions of the world to say you’re having a particularly good day,” according to a new survey conducted by Pew Global. Last year, Pew asked 42,000 people in 38 countries around the world, “How would you describe your day today – has it been a typical day, a particularly good day or a particularly bad day?” Nigerians were most likely to respond positively with 73 percent saying it was a good day. Colombians, Ghanaians and Brazilians were also particularly cheerful. Americans and Canadians are more likely to be having a good day than Europeans. Australians rate pretty low on good day responses, perhaps because they’re too busy saying “g’day.”

   

In the Long Run, Shenzhen’s Electric Kool Aid Buses, & the Tallest Buildings

We return to you this week, if not triumphantly, then with a limp and a cane, from knee replacement surgery. We’ve learned many things over the last few weeks. Nurses tend to be angels, and physical therapists aren’t far behind, even when inflicting pain in you (all for a good cause, of course). Our tolerance for pain is not what it once was. Binge watching the British TV show Black Mirror while on pain killers can cause bad side effects. Los Angeles (we had the surgery at Cedar Sinai in that fair city) is definitely an industry town. We shared an Uber with an aspiring actress, eavesdropped on a conversation where someone said they’d been on the red carpet but aspired to get on someone’s private jet, and heard gossip about William Shatner from one of our nurses (you are right to like Spock better than Captain Kirk). But as some were and are distracted by celebrities, we shake the stardust from our eyes and look at the Long Run, analyze innovative Shenzhen and gaze up at where the tallest buildings are. It’s this week’s International Need to Know, providing full range of motion to the world of ideas even as we can still only bend our knee 65 degrees.

Without further ado, here’s what you need to know.

In the Long Run

Everything we know is wrong, or at least some days it seems that way. We’d always been told that over the long run, housing prices increase at the rate of inflation. Sure there are housing booms (our town of Seattle is currently in an epic one) but over 20, 30, 40 years, there is a regression to the inflation mean. But now a new study comes along that not only asserts this is not true but that in the long run housing is the investment with the highest rate of return, including over stocks. And by long term, we mean dating back to 1870, the first year analyzed in the study from economists at UC Davis, the University of Bonn and Deutsche Bundesbank. The research paper analyzed the rate of returns of “treasury bills, treasury bonds, equities (what? no pork belly futures?) and residential housing from 1870 – 2015 for 16 now rich countries such as the U.S., Germany, and Japan. Housing’s annual average rate of return for that period is 7.05 percent while equities was 6.89 percent. This was not true for each of the 16 countries which in some cases saw equities have a higher rate of return than housing, but overall it was, leading the paper’s authors to conclude that investors should “hold an internationally diversified portfolio of real estate holdings, even more so than equities.” Sell your bitcoins and buy another house.

  

Shenzhen’s Electric Kool Aid Buses

Shenzhen is one of our favorite cities in China and as we have noted before, one of China’s hubs of innovation. This week brings two more pieces of evidence of the latter. First, is the report that by the end of last year, Shenzhen had electrified all of its buses. And being a Chinese city, Shenzhen is huge, which means they had a lot of buses to electrify; in fact, more than 16,000 buses which is more than America’s top five bus fleets combined. They did this, of course, to lessen pollution problems in the city. How Shenzhen is generating electricity to power those buses we’re not sure but we’re guessing coal plays a large role. Even so, it’s an impressive feat and another sign of the city’s forward thinking and innovative nature. So too is the fact that of the 4600 companies attending this week’s CES consumer electronics show conference in Las Vegas, 10% of them will be companies with the word “Shenzhen” in their name. We assume that means those 450 companies are based in Shenzhen. It’s yet another sign of the technological innovation taking place in Shenzhen, and in China.

The Tallest Buildings

Ambition and ego go hand in hand and when mixed together well, they can create great things, just as the right combination of chocolate and peanut butter, gin and tonic and Andre 3000 and Big Boi lead to great cookies, drinks and music. Building super tall buildings is evidence of both ambition and ego and countries where they are being built are often dynamic ones, where things are happening and people are thriving. The United States in the early and mid 20th Century is a great example. China today is another. As you see in the chart below, China dominates in the number of super tall buildings being built. Of the 120 super tall buildings under construction, 69 of them are in China. The UAE and USA are distant seconds and thirds. Gaze upon the height of ego and ambition below and draw your own conclusions about the correlation between a country’s economic dynamism and the size of their buildings.