We Are The World.* From South Africa to Sweden, from Brussels to Brazil, there have been demonstrations around the world protesting the murder of George Floyd. This global phenomenon raises two questions. First, why does the world care so much about what happens in America? And second, why do we not see similar worldwide demonstrations against systemic problems and abuses in other countries? For example, do not Uyghurs’ lives matter? We think the answers are related.
People around the world are more likely to join protests addressing issues in America because they know there is a better chance of changing America than there is, for instance, China. America, despite all its many faults, is a democracy that has continued to change over time. China is an authoritarian dictatorship less likely to respond to worldwide pressure from demonstrations in the streets.
We actually think China would be susceptible to such pressure and we outline ways to use such pressure in our upcoming book but it’s understandable that America is seen as a more malleable target by the world. But second, and even more important, America, again despite all its many flaws, sees itself, and is seen by many in the world, as a beacon of hope, as an idea of liberty. That America has often failed in being that beacon spurs people all the more to make it so.
Te Nehesi-Coates once wrote “I propose to take our countrymen’s claims of American exceptionalism seriously, which is to say I propose subjecting our country to an exceptional moral standard.” That’s what the world is doing. If America does indeed start holding itself to a higher moral standard, because of our size, power and history, standards will also be raised for the whole world, including for authoritarian countries.
America is not currently a beacon for liberty around the world. But it may one day be so again, and many people around the world are working to make it so. And we aim to make a brighter day by giving information on how China is lessening its influence, Ethiopia’s successful Covid-19 response and Vietnam’s under reported new trade agreement. It’s this week’s International Need to Know, aiming to be the Quincy Jones of weekly international information and data.
*It was recently the 35th Anniversary of We Are The World, which at the least is far less offensive than its sister Do They Know Its Christmas**, one of the four most offensive holiday songs ever written. But Ray Charles? He can sing any song and redeem it.
**We defy you to defend these lyrics: “And there won’t be snow in Africa this Christmastime; The greatest gift they’ll get this year is life;
Where nothing ever grows; No rain nor rivers flow; Do they know it’s Christmastime at all? Here’s to you; Raise a glass for everyone”
Without further ado, here’s what you need to know.
China Buys Less But Wants More Influence
When Obi-Wan Kenobi said, “If you strike me down, I shall become more powerful than you can possibly imagine” he was ripping off Jesus Christ but he was also onto something as we’ve seen over the last two weeks. China’s leaders, when it comes to trade, may want to study Obi-Wan. Last week China released trade data showing its May exports dropped 3.3 percent from a year earlier and its imports plummeted 16.7 percent from the previous year. China’s exports dropped less than might be expected partly because of its continued medical supply exports. Its imports plummeted because of a lack of demand domestically. As we wrote last week, no economy is an island during a pandemic and China is no exception. But we also need to remember that China in the long run is hoping to become more self-contained and build more of the stuff it currently imports. Pandemic or no, China may continue to import less. One current geopolitical strategic advantage China has is that it is so entwined in the world economy. It uses its large market to leverage that. We write in our upcoming book, “China is the largest trader in the world, accounting for 12.4 percent of global trade compared to the U.S.’s of 11.9 percent.” But if China reduces its imports, then its status as the world’s trader will be dead. And unlike Obi-Wan, China will be far less powerful.
We Need To Talk About Ethiopia
Covid-19 data is like Seattle weather in June: very heterogeneous (it might be 80 one day and 59 the next), very difficult to predict, and often dissuades one from leaving their house. At the beginning of the pandemic many were worried the devastation it would wreak on Africa once it traveled there. But so far Africa is doing okay. Recently we pointed to Ghana’s success, this week we take a look at Ethiopia. Both infections and deaths are remarkably low in Ethiopia The last couple years we’ve been touting Ethiopia even while recognizing its challenges. Although Ethiopia has limited both infections and deaths from Covid-19, we are cautious in complimenting its approach to containing the virus. We are guessing there are factors we don’t understand that play a part in Ethiopia’s success, and for that matter other developing countries’ success. It’s true that Ethiopia readied central quarantine and isolation locations (unlike most of the U.S.), but thus far they haven’t really needed them. They have not locked down but have encouraged social distancing and hand washing. It is a young population so perhaps that explains part of the success in terms of a low death rate. Maybe the government is not fully reporting infections and deaths though it seems at this point we would be finding some evidence of misreporting. There is much about this pandemic we are yet to understand. In the meantime, we cautiously add pandemic response as another feather in Ethiopia’s increasingly multi-plumed cap.
Dept of Underrated News: Vietnam-EU Trade Agreement
In a world awash in news, don’t forget that Vietnam this week ratified a free trade agreement with the European Union. The agreement was signed a year ago, ratified by the EU in February and now will begin implementation. “The EU will lift 85% of its tariffs on Vietnamese goods, gradually cutting the rest over the next seven years. Vietnam will lift 49% of its import duties on EU exports and phase out the rest over 10 years.” In a separate, parallel investment agreement, “E.U. companies will receive equal treatment with domestic bidders in competing for public contracts in Vietnam.” Vietnam is on a bit of a roll. They so far have successfully contained Covid-19. Like all economies, Vietnam’s has slowed during the pandemic but is doing much better than other parts of Southeast Asia. They are benefiting from countries diversifying out of China and this agreement aims to accelerate that as Vietnamese economist Pham Chi Lan explains, “COVID-19 has given Vietnam a hard lesson about being dependent on China,” It also showed other countries, including the EU, the negative impact of relying too much on China in their product value chain. The EVFTA (free trade agreement) comes in the right time as all parties realize they need to pivot and restructure to diversify the supply chain.” Vietnam poses one of the five most important questions in the world. As they continue to develop economically, will they follow the path of Taiwan, South Korea and other developing countries that after fast economic development and reaching higher levels of GDP per capita start to liberalize politically? Or will Vietnam follow China’s new path of becoming more authoritarian to maintain power even while focusing on growing the economy?
|It occurs to us that too often we mistake good events for bad. For example, the protests in the street* about the murder of George Floyd. Like everyone else, our initial reaction was unrest in the streets is a sign of how bad the year 2020 is. But protests in towns and cities across America are not a sign of more bad, but of good. It’s like the MeToo movement when every week another sexual harasser or assaulter was revealed. Many of us were horrified. In truth, what was horrific was the many years of previous hidden sexual assaults and harassment. The revelations were the beginning of trying to solve the problem. So, too, are protests against police violence. Since Ferguson in 2014 (which we write about in our upcoming book about China—how is Ferguson relevant to China, you ask? You will have to read the book to find out!), in big cities there has been a reduction in the use of police force, as Samuel Sinyangwe details in his Fivethirtyeight.com article. This is partly due to the greater attention given this issue over the last 6 years due to the protests in 2014. Of course, that same article points out there has been a rise in police violence in the suburbs and rural areas–there is much, much more to do. Sinyangwe, who given his first name, is obviously wise, is the co-founder of Campaign Zero. This organization has created a list of research-backed, evidence-based policy solutions for reducing police violence. At the website, you can even track where your state and city are in implementing these policies. Here is a Twitter thread briefly listing and explaining these policies. If you are feeling gloomy about the last week’s events, I highly urge you to read the links. They provide a rational path forward and a way for all of us to get involved in walking down that path. As we roll up our sleeves, we kneel on bended knee while remembering we’re all in this together, reexamining Sweden and pondering why trees are getting younger and shorter. It’s this week’s International Need to Know trying to understand what it means around the world and here at home.|
*The looting and destruction of businesses is wrong but they are a separate issue from the largely peaceful protests. But since we raise the issue,we point out we are concerned at how many city officials are imposing curfews to deal with the violence and looting. Curfews are not needed. There are already adequate laws in place allowing for the arrest of people stealing and committing violence. Curfews, on the other hand, are pernicious and allow for further corruption by the authorities as you see in this video where an American citizen is detained for breaking curfew while exercising his inalienable right to assemble and express free speech. Mayors should stop reflexively using curfews during the continued protests and unrest.
Without further ado, here’s what you need to know.
Reminder: We’re All In This Together
A former elected official Facebook friend of ours keeps clamoring for Washington’s governor to re-open the economy. We try to remind him you can lead a pandemic citizen to a three martini lunch at their favorite restaurant but it doesn’t mean she will drink or eat. A nation’s economy won’t fully recover until the world’s economy recovers which means the world as a whole must successfully contain the virus. On March 26th in this space, we noted that we’re all in this together when it comes to the pandemic, both health-wise and economically. More evidence of this comes this week as Barron’s examines two countries that have successfully contained Covid-19 but whose economies nonetheless are severely affected by the pandemic, South Korea and Taiwan (Yes, CCP, Taiwan is an independent country—a very successful one at that–no matter what you want the rest of us to think). The article observes “Taiwanese consumer spending has plunged at the fastest rate on record even though the virus has been contained and the government never imposed lock downs.” The same is true in South Korea which since largely containing the initial large outbreak of Covid-19, has also seen retail and service sectors sales plummet. Now it’s true that both South Korea and Taiwan’s economies are doing better than in countries such as the U.K. and U.S which have not contained the virus. Job losses in those two countries are about twice what they are in Taiwan and South Korea. There are two lessons to be learned from this. An individual country’s re-opening doesn’t save the economy; containing the virus does. All countries’ economies do not recover until the virus is contained. In the current pandemic, the economic problem is a health problem.
We Need To Talk About Sweden Part 3
Like a Norwegian nationalist in 1814, we’ve been keeping an eye on Sweden. In our case because of Sweden’s limited shut-down policies. Now two and a half months into the epidemic, data shows they really are doing much worse than most other European countries. In Sweden, deaths per million people continues to rise while other European countries have bent that curve and in some cases are well on their way to zero. Sweden’s approach, at least through the first two and a half months of the pandemic, seems to be achieving much worse mortality results than many other European countries. That being said, we will note the caveat of their nursing home situation. We reported a few weeks ago that Sweden has many more nursing homes than its neighbors of Finland and Denmark. Professors from the University of Stockholm and George Mason University give Sweden a D for their elderly care but a B- for their overall response to Covid-19. Putting aside that professors seem to think they can grade everything, including countries (we didn’t know it was a test!!!), the two professors note that “upwards of 70 percent of the COVID-19 death toll in Sweden has been people in elderly care services, primarily the nursing homes.” For us to be convinced of the nursing home theory, we would want to see nursing home deaths pulled out of the data for all these countries and compare the results of non-nursing home deaths. If they are similar, than perhaps Sweden is onto something. If not, then Sweden’s approach is reaping much worse morbidity results, at least at this stage of the pandemic.
Trees Are Getting Shorter and Younger
As time passes, inevitably I will get older and shorter. Unfortunately for humanity, trees are getting shorter and younger. According to a new study published in Science last week, “The world’s collective forests have become shorter and younger overall in the past 50 years.” This is problematic for a number of reasons, including that taller trees sequester more carbon and provide more shelter for a whole host of species. The report determined that in North America and Europe, tree mortality is doubling over time. The reason for higher tree mortality is multifold but massive wildfires, invasive species, logging and encroaching development are among the main factors. Interestingly, one place where tree mortality is decreasing is here in our little neck of the woods, the Pacific Northwest. Around the world, there are efforts to plant multitudes of tree, which is good, but we also need to do a better job of protecting our old forests.
“…the vast stretches of the unknown and the unanswered and the unfinished still far outstrip our collective comprehension.”–JFK
The documentary Apollo 11 is the perfect movie for our lock-down. Tired of the four-walls of your quarantine abode? Apollo 11 shows striking new footage and sound of the mission that first brought humans to another land outside of earth, some 252,000 miles from our apartments, houses and condos. Despairing of our unambitious times focused so closely on power politics rather than on what should be the grand aspirations of the only species able to reason and analyze? Witness an eight-year mission that brought three humans to the moon, utilizing math, engineering and any number of other tools to understand the universe around us. Apollo 11 is quite simply one of the best, most important movies we’ve seen over the last ten years. At one point during the film, Buzz Aldrin turns on an old portable cassette player that plays John Stewart’s Mother Country as it tumbles end over end in zero gravity while Aldrin, Neil Armstrong and Michael Collins hurtle home towards earth, mission almost accomplished. How did NASA, America, the world accomplish this great feat? John Stewart sings, “When a century was born and a century had died; And about these ‘good old days’, the old lady replied; Why they were just a lot of people doing the best they could; Just a lot of people doing the best they could.” And we do the best we can to explain China’s new expansionist ways, the India-China border dispute and how Ghana is successfully containing Covid-19. It’s this week’s International Need to Know, shedding a tear of freedom for Hong Kong as we bring you our moonlit world.
Without further ado, here’s what you need to know.
China is an Expansionist Power
One of the themes of our upcoming book China Challenges is that China is increasingly expansionist. We expect to receive push back for this assertion since other than a few places such as the South China Sea and tiny parts of India (see below), China is not particularly so geographically. But China has become expansionist in recent years in any number of ways, including in transforming global institutions and online platforms. This week, for instance, comes news from The Verge that “YouTube is automatically deleting comments that contain certain Chinese-language phrases related to criticism of the country’s ruling Communist Party (CCP).” Youtube claims this was done in error but the problem had been raised with them as long ago as October 2019. Now that it is getting attention in the media, Youtube claims to be fixing the problem. As The Verge points out, it’s a little odd for an online platform blocked in China to be worried about criticisms of China’s authoritarian government. But China’s heavy handed tactics to get businesses to adhere to their ways, norms and messages have been effective, even on companies banned in China. China increasingly attempts to change the world to make the world safe for authoritarianism. Thus one of the reasons why we wrote China Challenges.
Last Minute Hong Kong Update: Hong Kong is one of my favorite cities in the world and what is happening there this week is sickening. What to do about Hong Kong is a difficult question to answer and there will rightly be much debate about it. But there should be no debate about Beijing’s stifling of freedom there. Arresting children, tear gassing people expressing free speech and generally terrorizing a population is wrong and every free country should plainly say so.
We once forgot our passport on a wedding anniversary trip to Vancouver, B.C. We managed to talk our way into Canada but were given hell by U.S. authorities on our way back. India would like to do the same to China who they view as illegally entering their territory. You may remember that three years ago we alerted you to a border dispute between India and China. Until last week, all was somewhat quiet on the China-India front. But now the two nuclear-armed, most populous countries in the world are at it again with varying reports of China crossing into Indian territory. We cannot offer any special insights into what is actually happening in this disputed area but fortunately Dhuruva Jaishankar lists five questions we should ask as we read these troubling reports: 1) What is the source of the information—he says there are only three: Indian military, Chinese officials and independent geospatial imagery. 2) In what sector is the stand-off taking place? He describes the sectors and how they are being conflated in reports. 3) Is a third country involved? It gets more complicated if Myanmar, Pakistan and others are involved. 4) On whose side of the Line of Actual Control (LAC) are developments taking place in? The geography of LAC is ambiguous, Jaishankar asserts. And 5) “Is either side making changes to the territorial status quo?” There is more than enough to worry about without India and China playing games on the border, but this is 2020—we deal with the year we have, not the one we wish for.
We Need to Talk About Ghana
We’re not a fan of royalty, as any red-blooded American should be, and have always been confused by those transfixed by Kate, William, or whatever are the names of those publicly-funded gadabouts over across the pond. But we always had a soft spot for Nana, the Ghanaian tribal chief we occasionally worked with in Seattle. And we are pleased to see Ghana doing well thus far in containing Covid-19. As you see in the charts below, their deaths per million is much lower than most developed countries and they bent the curve far earlier. One of the ways they did this was by using pooled testing. You can read an interesting breakdown of how Ghana does its pooled testing here (Pooled testing appears to be how Wuhan tested 7 million people over the last 10 days). Pooled testing has allowed Ghana to test many more of its citizens than other parts of Africa: “The Africa Centers for Disease Control (Africa CDC), the lead continental agency coordinating the regional Covid-19 response, in its 23rd April situation report, gave the total number of tests conducted on the continent as 415,000, of which Ghana alone was responsible for at least a sixth.” Ghana is somewhat underrated in recent years. Its economy has grown at more than 6 percent, there have been some political reforms and now it is competently dealing with Covid-19, without the resources of developed countries. Keep an eye on Ghana during and after the pandemic.
The Last Dance is over and sports fans are desperate. Is college football coming back? Will the coliseum be activated with the lions salivating, the crowds roaring in front of their televisions, iPads and smartphones? Will Maximus Decimus Meridius, class of AD 180, collide with his fellow collegiate slaves this fall? We discussed whether college football will reopen with an old friend (he’s actually a month younger than me, so quite young). We posited that college football of all sports might be the most difficult to restart this fall absent a medical miracle. After all, many campuses may remain virtual fall quarter—the California colleges have already announced they will be closed. Would we really expect “student”-athletes to be the only ones to gather on campus? Is it realistic for unpaid young people–slaves of the NCAA and their member schools–to play a contact sport in which dozens of men are grunting and breathing on each other in close quarters, even as engineering students, business majors and literature freaks connect only online? Of course! Or, at least my friend convinced me that the SEC, where football is homecoming king and queen, will do everything possible to play this fall. The south and Texas may indeed resume football in September, but will the rest of the country? Our friend envisioned the SEC playing as usual but other parts of the country, including the west, waiting until January. All we want is not to go on our annual Seattle Mariner Temper Tantrum—this time not over another anguished loss during the regular season but over the entire rebuild of the team being ruined by the pandemic. As the tantrum brews, we tackle what’s happening in South Asia, throw a pass to Solar’s ascent and try to block odor recognition technology. It’s this week’s International Need to Know, passing and kicking, but never punting on important international information and data.
Without further ado, here’s what you need to know.
We Need to Talk About South Asia
We picture an epidemiologist sitting alone muttering to herself in the ratty booth of the last dark dive bar open in her city as she gazes into the glow of her tablet at the heterogeneous pandemic data around the world. When she gazes at South Asia, she downs the rest of the bottle of her cheap whiskey, breaks the flask of Hydroxychloroquine in her lap and uses the jagged glass to challenge the bartender to a fight. Everyone was worried that places like India, Pakistan and Sri Lanka, with overcrowded housing, overwhelming poverty and primitive health care infrastructure, would be devastated by Covid-19 when it reached their lands. Thus far (the two most important words of the pandemic), this has not been the case. Death per million people rates in South Asian countries are far, far lower than in Europe and the U.S., as you can see in the graph below. South Asia also fares much better using CFR–the percentage of deaths among confirmed corona-virus patients. Al Jazeera reports, “France, 15.2 percent; the United Kingdom, 14.4 percent; Italy, 14 percent; Spain, 11.9 percent and the United States, 6 percent…By contrast, in South Asian countries, those rates have been far lower. India has a CFR of 3.3 percent, Pakistan 2.2 percent, Bangladesh 1.5 percent and Sri Lanka 1 percent.” Why is this the case? Nobody knows for sure. Perhaps these countries are under reporting deaths, perhaps it has not spread far enough into the populations yet. Or, maybe, it is due to their younger populations. Or more speculatively, perhaps it is due to more exposure to other chronic infections. Grab your bottle of choice and await more data and research.
The Ascent of Solar
With the Covid-19 pandemic, Murder Hornets and the emergence of a four-foot ravenous lizard in Georgia (shouldn’t it be terrorizing Tokyo?), it’s easy to assume the world is going to hell in a hand basket. But lost amidst the terrorizing noise, is an abundance of good news, including the continued ascent of solar. One of the first articles we wrote in this space was a prediction that solar power prominence may come sooner than expected. Seattle area clean energy investor Ramez Naam recently published an update of his analysis on the future of solar power, which he has been writing for ten years. He notes his previous forecasts have all been too pessimistic on the rate of decline of solar power costs. As you see in his chart below, “solar costs dropped by a factor of 5 since 2010.” This is true globally, in China, India and in the U.S. There is no guarantee that costs will continue to drop at this rapid rate, and solar, as Naam himself points out, still needs continued advances in storage (although there are great strides being made there too). But the world is well on its way to replacing dirty energy such as coal with solar (last week came news that more energy was generated in the U.S. by renewables than coal). CO2 emissions are down but the pandemic won’t save us from climate change, technology will. We hope Greta and the New Amish* will recognize this in their efforts to fight against climate change. Yes, times are irrefutably tough right now, but there are also important improvements being made. Don’t forget them while you’re hunkered down against the pandemic.
*Too many people fighting to prevent climate change believe in degrowth—purposely stopping economic growth. It won’t work, is unfair to impoverished nations, and is an Amish-like mentality. But, Greta and the New Amish is a great name for a band.
“I Know Her By Her Gait”
Many moons ago, we wrote about China’s efforts in gait-recognition technology. In the age of pandemic-induced mask wearing, China is upping the ante on gait-recognition technology and physical recognition technology in general, according to a fascinating article in City Journal. There has been a backlash against facial recognition technology in both Europe and the U.S. And Hong Kong protesters evaded authorities using such technology by wearing masks, which now everyone is wearing (or at least should be). But the Chinese AI company Watrix has improved its gait recognition technology and it is increasingly used by the security industrial complex of China. And, according to City Journal, other physical recognition technology is in the works: “First, gait, then heartbeat patterns, and, eventually, microbiomes—every person emits about 36 million microbial cells per hour, and human microbiomes are unique—or odor biometrics.” You will be known by your smell. The corona virus is not the only unseen danger to our new world.
A few years ago, our knee aching, we hung back and perched ourselves on a stool in the laundromat while the tour continued nearby. As the dryers spun and the tour guide pointed to some 45’s on the wall, a woman folding some shirts struck up a conversation with us. For New Orleanians, conversation flows like the waters in the bend of the Mississippi river outside their doors. It turned out she was the wife of the famous jazz saxophonist Donald Harrison who, she told me, was touring in Japan. Why wouldn’t the wife of a jazz saxophonist be washing her clothes in a laundromat that once was the site of the famous Cosmio Studios, one of a few select locations in America where rock and roll was born? Some 60 years earlier, Little Richard recorded pretty much where I was sitting—wop baba loo bop, wop bam boo my heart pounded just thinking about it. Little Richard died last week at the ripe old age of 87. Probably few people under the age of 40 knew who Little Richard was when they saw the news, if they even saw the news at all. This is perhaps both a bit sobering for all of us over 40, and also a good elixir for those who think everything happening today—whether in arts, culture, politics or just about anything else–is the biggest thing ever. Eventually it all comes out in the wash and everyone of us become the equivalent of a laundromat, lost to history. Nonetheless, we do a thorough rinsing of those claiming globalization is ending, scour India’s recruiting companies out of China and fold in Denmark to the list of countries testing, tracing and isolating. It’s this week’s International Need to Know, wondering if Sam I Am can sell our soul to Huawei like Will.I.Am even as we rap out the world’s most important international information and data.
Without further ado, here’s what you need to know.
Globalization to the Rescue
We increasingly read thought pieces about the end of globalization. In some cases, the authors are fond of globalization, in others they are rooting for its end. Whether you’re for or against, we’re still skeptical that globalization is coming to an end. Yes, international trade is diminishing but even more so changing (see story about India and China below). And, of course, almost nobody is currently flying to other countries. But we’re all connected via the Internet even more than before and supply chains are still global. Plus, the great race to develop a vaccine is global as well. Companies across four continents are working to develop a vaccine. And these companies often partner with other companies from other countries. It is true that a majority of the companies (8) are headquartered in the U.S., but you can bet your bottom dollar from what’s left of your portfolio* that many of the researchers at these U.S. companies are immigrants. How much worse shape would the world be in without the free flow of ideas, talent and supply chains? A helluva lot to give a technical answer. Globalization is not dead—it may even save us.
*Why is the stock market holding up so well? We have a theory but you will have to buy us a beer (when that’s allowed) to get it.
India Taking from China
It’s not surprising that during a period when countries all over the world are closing their economies that international trade volumes would be down. But more interesting is that supply chains and trade patterns are likely to change, or at least various countries are working to make it so. Sure the U.S. and China governments are trying to decouple in a variety of ways, but other countries are working to leverage this trend. According to Bloomberg, India “reached out to more than 1,000 companies in the U.S. and through overseas missions to offer incentives for manufacturers seeking to move out of China.” We’re curious how this will work out. As I write in my upcoming book about China and the U.S, “I have not worked with India nearly as much as with China…but in my experience, it is just as difficult to do business in India as in China, but for very different reasons.” Chiefly the crazy bad bureaucracy of India. Indians themselves recognize this problem, listing bureaucracy as the biggest challenge facing startups in a recent survey. Of course, it’s not just India looking to convince companies to move to their country. We noted a month ago that Japan is subsidizing its companies to move back to Japan or to other parts of Asia. Europe is looking to protect its companies, and Vietnam is already a prime place for relocation. China is large enough that perhaps it can make it on its own, if their exports and imports diminish. But 1.3 billion Chinese at some point might bristle at the rest of the world’s strong arming their trade…or perhaps even at its own government’s iron fist.
We Need to Talk about Denmark
When pondering Sweden’s Covid-19 approach, we’ve often compared its data to Denmark’s. Denmark has far fewer deaths per million than Sweden and now is taking the next step to opening its economy—implementing a rigorous test, trace and isolate system. Earlier this week, Denmark’s Prime Minister Mette Frederiksen (don’t you dare spell it with an “o”) announced the implementation of the strategy, “Once a person has been tested and found to be infected, the authorities will this week start to track who they have been with, so they can be isolated quickly and we can break the chain of infection.” Testing and tracing Danes will be the main focus of the Danish Health Authority. Crucially, the government is also going to be renting rooms in hotels and hostels where they will house those who have been infected. The head of the Danish Health Authority said, “We will then use this to support intensive isolation of all those who present a risk of infection and in this way we are quite optimistic that we will break the chain of infection in the coming phases of reopening.” One of our Facebook friends, a former public official, recently posted criticism of Washington State Governor Jay Inslee for his not reopening the economy right away. We pointed out that testing, tracing and isolating, which Washington is working to get in place, is the way we reopen our economy. We hope to soon add great Dane data to that of Taiwan, South Korea, Vietnam and New Zealand in persuading people like this Facebook friend to accept reality.
This is a love story. Thursday morning at 11 we walked onto the fairgrounds and into the Blues Tent on the first day of Jazz Fest. A guy originally from Seattle we read about in preparing for the festival, Colin Lake, sat alone on the stage, playing a lap-steel guitar. I mean really playing it—he was a great launch into three days of spectacular music. Thursdays are in some ways the best day of the festival. Mostly local musicians play, the crowds are not so large and you can easily wander from stage to stage. Thanks to Sylvester of the Backstreet Museum, we knew the secret to Jazz Fest (and no, we won’t tell you what it is–you’ve got to get it from Sylvester yourself). Over the next few years we saw Lake play on a number of occasions. His entrancing The World Alive was always a favorite. Like many of us, Lake fell in love with New Orleans on his initial visit. At Louis Armstrong International Airport, waiting on a delayed flight back to the Northwest, he pulled out his guitar and played for the other passengers. One of whom was a woman named Dawn Marie. He must have played well because he and Dawn moved to New Orleans, got married and Lake became a musical fixture in the Crescent City. Until 2017, when they sold their house, bought a sailboat and took to the sea as the world moved through choppy waters. But now he’s back, or at least his music is. And he’s released a single perfect for the moment, Extraordinary Times. So as we grapple with our third month in captivity, worrying about the lives lost, the economic carnage, and the negligent homicide of the executive branch of the U.S. federal government, perhaps we should hum Lake’s latest lyrics, “The time has passed for lookin’ out through ordinary eyes.” As we do so, we gaze upon China’s precarious economy, hold our spectacles up to nursing homes and Covid-19 and throw a skeptical eye to worries about dependency on China for drug ingredients. It’s this week’s International Need to Know, providing international data and information in extraordinary times.
Without further ado, here’s what you need to know.
China’s Precarious Economy
Our upcoming book about China asserts that fast economic growth will not return to China and notes that “it is the highest indebted emerging market economy in the world.” Of course, the Covid-19 pandemic has turned slow growth into negative growth for at least the short term. It also has made China’s debt challenges more risky. The economics editor for Bloomberg points out that “A worst-case stress test last year by Chinese authorities showed that 17 of its 30 biggest banks failed to keep capital at adequate levels with economic growth slowing to 4.15%, a situation that now looks wildly optimistic.” Yeah, China, whatever official GDP numbers they publish this year (our book will be 1017% more accurate than China data), is unlikely to achieve 4.15 percent growth. Perhaps because of their debt issues, China is not responding so far with stimulus as large as they did during the financial crisis in 2008 and 2009. Ravi Vellor in the Singapore Strait Times points out that Chinese household debt to income has risen from 40 to 140 percent the last ten years. Countries around the world are in uncharted territory due to the pandemic with world GDP expected to decrease more than 3 percent this year. But China is perhaps especially at risk with limited options to deal with economic fallout from the pandemic. Of course, China has surprised on the upside economically for 40 years so perhaps its leaders will somehow find a way to thread their economy through the current pandemic pin.
Nursing Homes and Covid-19
It seems like decades ago that Seattle was the epicenter for Covid-19 outbreaks in the U.S. Our hometown’s high death rates early on were due to one nursing home. Since then we are now but a footnote as the virus spreads and death became far more prevalent in New York and elsewhere. But are heterogeneous high death rate data explained by how many nursing homes a region/country/state has? A reader of the Marginal Revolution blog thinks so and points to WHO data to back it up. In the chart below you can see the number of nursing and elderly home beds in a variety of European countries. Interestingly Italy and Spain, which have high death rates, also have a high number of elderly home beds. Sweden, which is often compared to its Nordic neighbors unfavorably in terms of number of deaths, has many more nursing home room beds compared to Finland and Norway. Does that explain the difference in death rates more than their lockdown policies? We don’t know. After all, Germany, which has lots more nursing and elderly home beds than Spain, Italy and Sweden, also has relatively low death rates. The heterogeneity of Covid-19 data continues to challenge. And speaking of which, what explains the difference between Eastern and Western Europe (see third chart below)?
80% of Drug Ingredients Do Not Come From China
No creature craves love more than our cat, Putter, who has interrupted nearly every Zoom meeting we’ve had during lock-down, demanding to be petted and curl up on our lap. Unfortunately he also needs lots of drugs too, taking four different heart medications—he’s like an old retired man in Florida. Early in the pandemic, when we heard warnings of possible drug shortages because the U.S. sources 80 percent of drug ingredients from China, we proactively ordered more of Putter’s medicine just in case.We experienced no delay in receiving those drugs for that order or since. It turns out that’s partly because the 80 percent figure is made up. According to a well reported piece in Reason, the 80 percent figure is a misquote from a press release by Senator Chuck Grassley that continues to be passed along in a variety of mediums. No one knows the exact figure since the FDA does not track such data, though the most recent stimulus bill passed by Congress mandates they now do so. The FDA does track manufacturing facilities that export to the U.S. That data, as you can see below, shows China’s share of such facilities is only 13 percent. Maybe the small number of Chinese manufacturing facilities accounts for an out sized share of drug ingredients produced for the U.S. Whatever percentage China is responsible for, there have not yet been any drug shortages for Putter or for the rest of us. For that we are thankful, and we will now allow Putter, clamoring to do so as we write, to climb up on our lap.
As we locked our bike outside the grocery store, the security guard said to the customer in the wheelchair, “they don’t know nothing, whether the virus came from a lab or not. I tell you it was either the Chinese or the CIA, one or the other.” While we doubt being more transparent on pandemic data will persuade that security guard (we did not, btw, feel more secure with him outside the store), we do continue to call for leaders to be more upfront about data and criteria for policies. Our fair state of Washington is no exception. We continue to assert Washington State leadership ranks near the top in the US in dealing with Covid-19, but they need to do even better. Over a month ago we called for testing and tracing and finally two weeks ago Governor Inslee started talking about it and now the state is trying to hire 800 tracers to get to a total of 1500 (an NPR report claims this is too few). They should have done this well over a month ago. And they are still only talking about quarantine facilities for the homeless. We need to provide quarantine facilities for everyone who is infected and for those who come into contact with the infected (the latter are quarantined until they test negative). There are plenty of hotels available for this. How do we come up with these conclusions? Our second story below shows which countries have been successful not in just flattening the curve but in reducing infections and deaths to near zero. All of these places test, trace and isolate (and require masks). Wuhan did too. I know it’s in vogue to hate China and we ourselves have written an entire book about the challenge of China and what we need to do to counter it. But we must always be guided by data and evidence and both point to the success of China’s central quarantine efforts (ours can be far more humane and without the authoritarianism of China’s). Lockdowns have flattened the curve in most countries. But the goal should be to bring the infection and death rate to near zero. To do that, current evidence points to test, trace and isolate using central quarantine facilities. As we await our leaders response, we isolate ourselves to examine Vietnamese cyber hacking of China, country data on test, trace and isolate, and the state of R&D around the world. It’s this week’s International Need to Know, thinking of the late, great Dr. John on Piano Night while prescribing cures for the world’s blues.
(Last minute update: Late yesterday Governor Inslee released a risk assessment dashboard with explanations and a way to track progress on among other things, testing and tracing capacity and isolation and quarantine capacity. Washington is now very transparent on data and criteria for where the state is and what is needed for opening up various aspects of the economy. Huge kudos to the Governor and his team for doing this. As we wrote above, Washington’s leadership has been one of the best in the country in the pandemic. We asked for improvement and they provided it. They deserve our thanks and admiration. If your state/province/country is not doing what Washington is, ask them why not).
Without further ado, here’s what you need to know.
Vietnam’s Cyber Hacks Into China for Health
So if you’re a country that suffered from SARS 17 years ago, and word starts to spread of a strange new pneumonia disease spreading in Wuhan, China, and like any rational actor, you don’t trust the information China’s government is releasing, the natural action is to go searching for the real information in China. Which apparently is what Vietnam did in early January when a Vietnamese-tied cyber actor called APT32 hacked into China’s Ministry of Emergency Management and Wuhan’s local government. According to cybersecurity company, FireEye, “The first known instance of this campaign was on Jan. 6, 2020, when APT32 sent an email with an embedded tracking link (Figure 1) to China’s Ministry of Emergency Management.” We assume that the Chinese Ministry’s equivalent of our 84-year-old Mom opened the link allowing Vietnam into the Ministry’s network. Vietnam’s government is denying any cyber hacking of China but Reuters reports that FireEye’s senior manager Ben Read asserts, “These attacks speak to the virus being an intelligence priority – everyone is throwing everything they’ve got at it, and APT32 is what Vietnam has.” China, one of the biggest cyber attackers in the world (but for some reason Americans fixate on Russia), is condemning such attacks on their agencies. Viruses are rampant online and off during the pandemic.
Countries that Test, Trace and Isolate Do the Best
With sports at a halt, instead of reading baseball box scores or analyzing NBA playoff statistics, we find ourselves poring over Covid-19 data from around the world. It is not nearly as much fun, much more scary and certainly more confusing. But it is intellectually stimulating and as you see in our chart below, countries that have a high number of tests per confirmed case have much lower death rates. That’s a correlation without much meaning but what it is showing is that countries with large number of tests per confirmed cases likely have a much more accurate reading of the number of infections in the country. As Our World In Data explains, “A country that performs very few tests for each case it confirms is not testing widely enough for the number of confirmed cases to paint a reliable picture of the true spread of the virus…The large number of tests for each confirmed case in Taiwan and Australia suggests that the number of confirmed cases paint a much more reliable picture of the true number of infections in these countries.” Vietnam* is the true star in this regard and Vietnam appears to have the pandemic under control, as do Taiwan, New Zealand and South Korea. What do those countries also have in common? Each of them have robust test, trace and central quarantine programs. If your state, province or country is not doing that or is not rapidly gearing up to do so, ask them robustly why not. They will not get anywhere close to normal without it. NPR is tracking which U.S. states are prepared to trace as is testandtrace.com. I hope they soon report on which states are prepared to quarantine more intelligently.
**I often hear critics of test, trace and isolate claim that it can only be accomplished in small countries. Vietnam is not small. It has a population of 94,6 million. Yes, it’s smaller than the U.S. but it is not small. And Vietnam’s economy is about 1/100 the size of the U.S. America has no excuse for not being able to institute test, trace and isolate. If Vietnam can do it, than so can the U.S.
R&D Around the World
In reading some back and forth about whether the U.S. is investing enough in R&D, we became curious about the rest of the world. After all, it is research and development that gets us out of this pandemic. It turns out UNESCO has excellent data on how much countries spend on R&D. In the bubble chart below you can see how much countries are spending on R&D (the size of the bubble), their R&D expenditures as a percent of GDP (larger the further right you go) and the number of researchers per million inhabitants (more the higher up you go). The star is Israel (star of David?) which has the second highest R&D expenditure as a percent of GDP and the most researchers per million inhabitants. This helps explain why Israel has such a successful high tech economy and perhaps is an indicator of why they have thus far** so successfully contained Covid-19. Note other successes such as South Korea, Japan, Finland, Sweden and Switzerland. And, frankly, the U.S. doesn’t look so bad by this measure. But there’s certainly room for improvement and immigration restrictions which cut off talent, drive and innovation, will harm America’s R&D capability in the future.
**The words “thus far” should be used in all analysis of Covid-19
We arrived well before warm ups and as we sat down there was an electricity surging through the arena. When the Chicago Bulls came onto the court for warmups, every single eye was fixated on Michael Jordan. This was in the early 1990s at a Washington Bullets game. I had never seen or felt anything like it before or since.* Just Jordan’s presence on the court, before the game even started, made it feel like Jesus rising from the sports pulpit. As Larry Bird once said after Jordan scored 63 points, “that was God disguised as Michael Jordan.” I honestly don’t remember much about the game but I’ll never forget the crowd and the effect Jordan had on it. We guess that all the people at that game watched the first two parts of The Last Dance that aired Sunday night, ESPN’s documentary on the last championship of the Bulls, but really about Jordan. It was impossible not to contrast Jordan’s authentic desire to win at all costs depicted in the film, that the team’s winning was what was important, to today’s players attitudes. Many of today’s contemporary players want to win but it is about their individually winning a championship, not about the team they play for. It is interesting that today’s generation is much more fond of collectivism and socialism than Jordan’s, but today’s players are much more assertive about their individual rights than they are about the success of the team. We’re not sure this is a contradiction but rather a different level of knowledge about how the world works, both for the player and the owner. While we ponder what this all means, we set a screen for Italians hating Germany more than China, dribble some more around Sweden and blow a whistle on Jordan in China. It’s this week’s International Need to Know dancing with international data, waltzing with global questions.
*Though our opportunities are limited thanks to Howard Schultz unforgivably selling the Sonics to OKC
The last weekend of April is traditionally the first weekend of Jazz Fest in New Orleans. This year because of the cursed Covid-19 pandemic, Jazz Fest is cancelled (sigh, one of our favorite vacations was attending 2014 Jazz Fest), but WWOZ is replaying past highlights all weekend–we are listening to Kermit Ruffins 2015 performance as we type.
Without further ado, here’s what you need to know.
Never Mind China, Italians Hate Germany
Like a couple of high school students hopped up on hormones, China and the United States are in a battle for love in the time of coronavirus. As we noted a few weeks ago, both countries could come out of the pandemic less popular. But a recent poll of Italians shows China achieving some PR success there. In a poll conducted March 20 – April 12, 52 percent of Italians listed China as a friendly country compared to only 17 percent listing the U.S. as a friendly one. In a sign of perhaps just how difficult Germany has been on EU economic relations dating back to the financial crisis in 2008, 45 percent of Italians think of Germany as an enemy country. China has tried to leverage its aid to Italy for good PR, even though much of it turned out to be damaged goods. But how the media covers these issues is also important. According to the Atlantic Council, “The news of the cargo flight from China has had more than triple the visibility compared to the announcement by US President Donald J. Trump to send $100 million of assistance to Rome.” The current U.S. Administration has severely damaged America’s credibility around the world, which is a boon to authoritarians. But even so, news organizations need to cover the facts on the ground, not just a distaste for an incompetent, failed U.S. Administration.
We Still Need to Talk About Sweden
Two weeks ago, we noted we must grapple with Sweden’s only partial lockdown policies. Even as we wrote that the world needs to keep an open mind about Sweden’s approach, we wrote, “Perhaps a week from now Sweden will be a catastrophe.” Two weeks later, Sweden is not a catastrophe. Maybe it will be in the future but not yet. As you see in the first graph below, Sweden’s death rate may have peaked. It is true that Sweden has thus far done worse than its Scandinavian neighbors (see second chart) but it is still doing better than many other European countries. There could be many reasons for this—as we wrote last week, data surrounding this virus is remarkably heterogenous.** And, it is way too early to make conclusions one way or another about Sweden. As noted, Finland and Norway have much better infection and death rates, but what about 6 months from now? 12 months from now? 18 months from now? (will there is an effective treatment or vaccine developed and distributed before then?). Sweden is, of course, different than the U.S, Italy and other countries, as our favorite named person of April Dirk Schwenk points out. We would not have adopted Sweden’s approach but two weeks after we first wrote about it, we still can’t make definitive conclusions.
**For example, what are we to make of Bali, which has incredibly low rates of infection and death despite hundreds of thousands of Chinese, including from Wuhan, visiting there in January? There is so much we don’t yet understand about the pandemic.
Taking the Air Out of China
As we noted above, on Sunday ESPN aired the first two parts of a new documentary on his Airness, Michael Jordan, bringing much needed content and salve to sports fans all over the world. The NBA is huge in China despite the government’s authoritarian rebuke to the Houston Rockets’ Daryl Morey calling for freedom in Hong Kong.*** Michael Jordan is also big in China and has been fighting for years to protect his trademarks. He won a partial victory there last week when China’s Supreme Peoples Court (note that whenever an authoritarian government uses the word “people” in an organization’s title, it has nothing to do with people like you and me) ruled that “Qiaodan Sports, a company based in China’s southern Fujian province, had illegally used Jordan’s name in Chinese characters.” But at the same time, the Court ruled the company can continue to use a silhouette of Jordan that is the Qiaodan’s logo. The ruling on his name overrules two lower courts judgements. How this all works in practice in China will be telling. China continues to have a very closed economy and as we’ll likely talk about next week, there is increasing pushback from the world. Jordan’s competitiveness is on full display in the documentary, but can he dunk on China?
***China arrested 14 human rights activists in Hong Kong earlier this week. Maybe Italians mistook them for Germans?
It is easy to be dazed, confused and appalled during these strange times. We confusedly dance with the heterogeneous data coming out of the Covid-19 pandemic like the Nicholas Brothers* searching for their tap shoes in Elmer Lake, Oklahoma.** Take one of a thousand examples we could offer, the list of the U.S. towns and cities with the highest Covid-19 death rates per 100,000 people. What do Bellingham, WA; NYC; Greeley, CO; Pittsfield, Massachusetts and the other towns have in common? No idea. It is easy to be appalled at the most incompetent wannabe dictator since Commodus. The U.S. President claims dictatorial powers on one hand and with the other one does nothing about testing, tracing or nearly anything else. It is easy to be dazed by the fact we may never be able to attend a baseball game this summer, nor a concert or any other large gathering. As we wonder, worry and lament all of these things, we turn to Haiti for hope (Editor: Good God, are we that doomed?!!!). The country that has suffered earthquakes, hurricanes, misrule, criminal abuse by the UN and much more, gives us salve. That’s because the Haitian musical collective Lakou Mizik teamed up with New Orleans’ legendary Preservation Hall Jazz Band to write a song that reminds the world of all the good of Haiti—flowers, rolled coconuts, avocados, cassava bread, and certainly its vibrant spirit. So if we can find beauty and hope there, surely we can team up like those wonderful Haitian and NOLA musicians to find and work for good in our world. While you pick up your instrument we notice what’s filling the world’s vacuum, examine the collapse of international trade and provide a mea culpa for a recent mistake. It’s this week’s International Need to Know, Creole for important international information and data.
*The Nicholas Brother accomplished what Fred Astaire called the greatest dance performance ever
**The setting for Footloose
Without further ado, here’s what you need to know.
Filling the Vacuum
The other day I was cleaning up a mess with our upright vacuum and had to get down on the floor to pick up something wedged in a corner when the vacuum tipped over and hit me in the head. Which is all to say the world hates a vacuum, including of American leadership. That’s why some European countries and Canada are working to fill it. Or as the Global News puts it, “Canada has formally joined a German-French coalition aimed at saving the international world order from destruction by various world dictators…” Many countries are concerned at the abandonment of global leadership by the U.S. since Trump became president, and are not ready to hand over the keys to an authoritarian China. So, new alliances and institutions are being built, without the involvement of the U.S. Japan is also part of the nascent Germany-France-Canada effort. Japan has been busy in the last year creating new geopolitical partnerships. Last year, we told you of Japan’s creating an alliance with Vietnam. This is all good news. The world needs democracies to build new international structures even if the U.S. does not participate. The old world order is dead or just about. Long live the new world order…as long as its built by liberalized societies and not authoritarian ones.
This image is dedicated to Charlie Mitchell
Crashing Global Trade, Globalization Stands
Many are heralding the end of globalization due to the Covid-19 pandemic. Morticians should hold off, it’s not even on a ventilator yet in our diagnosis. It’s true that global trade has been growing slower than GDP for a number of years but it was still growing until the pandemic. And, of course, globalization is more than trade in goods and services. It is also connectedness through the Internet, financial flows and immigration. The first two are flowing even more since the pandemic, the latter has been in retreat for a few years and is virtually at a stop currently due to pandemic-induced border controls. And now international trade is indeed crashing due to worldwide lockdowns crushing demand. The World Trade Organization (WTO) has created scenarios for how trade might drop in the coming months and year due to the pandemic. In an optimistic scenario, merchandise trade (things you can touch and feel like airplanes, cars, computers and swabs) would fall 13 percent year over year. The worst case scenario? WTO says “global merchandise trade will plummet by 32 percent relative to 2019. This includes a fall in merchandise exports from North America of 40.9 percent, from Asia of 36.2 percent and from Europe of 32.8 percent. Imports would drop by 33.8 percent to North America, 31.5 percent to Asia and 28.9 percent to Europe.” Ultimately the world progresses past the pandemic by cooperating, including through trade, but the short to mid term is scary indeed.
Naughty By Nature
When we wrote on April 2 about a study in Nature Medicine we interpreted as saying the Covid-19 virus had possibly been spreading in humans for years and might not have originated in Wuhan, we noted “It is still early days in the study of this virus and the pandemic so take everything, including what I write, with a large grain of salt.” We regrettably must grab a rather large size salt shaker because thanks to our friend and doctor, Jim Roos, we have discovered we misinterpreted the Nature article. Jim explains to us that the Nature article authors “do NOT suggest the virus entered the human population and then spread within the human population for years or decades, gradually evolving until it caused human disease.” Instead the article suggests “a series of spillovers,” that Jim explains are “similar to MERS with its ‘short transmission chains’ that ultimately terminate.” Every time one of the “spillovers” occurs, there is a chance the virus will mutate and one of those mutations could “develop the key protein (the polybasic cleavage site) that seems to be necessary for human-to-human transmission.” So, Jim explained to us, “it’s not that the virus has been passing WITHIN the population but rather that it ‘kept trying to’.” Jim tried to make us feel better by pointing out it appears the NIH director similarly misinterpreted the article. Unfortunately, according to Trump Administration rules, this automatically makes us the new head of the NIH. We apologize to the country in advance for any errors we make in that position. One other point: I asked Jim whether the Nature authors’ theory suggest one way or another whether Covid-19 originated in the Wuhan area. He thinks it probably did originate there though he notes he is not a virologist, microbiologist or epidemiologist. You can read his reasoning below:
Jim Roos’ take on geographical origin of Covid-19: The paper does not address the issue of where the spillover event took place. However, I would say that it most likely did take place in Hubei province or nearby. However, it’s possible that it occurred elsewhere with infected people bringing it to Hubei but I would think there would’ve been a similar outbreak near the original location. My reasoning relies on the 2 characteristics of the “spike protein” discussed in the article (RBD, the “receptor binding domain”; and PCS, the “polybasic cleavage site”). The RBD is believed to be a key element of the infectiousness of the virus (i.e. it’s ability to cause infection in humans). Since a very similar RBD has been found in pangolins, the authors theorize that this was already present in the virus when it entered the human population. That is, it could cause an infection in those people who contracted it. But without the PCS, which has NOT been found in an animal host, sustained human-to-human transmission would NOT take place and an outbreak would not ensue. Now if the virus first mutated into its pathogenic form (i.e. had both characteristics) and THEN entered the population, the outbreak would happen in that area soon after since the virus was “ready-made.” If, however, the virus had ONLY the characteristic RBD when it entered humans, it then mutated within the population to form the PCS. HERE’S THE KEY (taken from the paper itself): “Once acquired, these adaptations would enable the pandemic to take off.” So as soon as the virus had PCS and was in the human population, the outbreak was inevitable. Now it’s possible that this mutation took place in a person who acquired the infection elsewhere and then moved to Wuhan, but I think this unlikely. And since before this occurred, sustained human-to-human transmission would not take place, I think the time between the spillover event and this mutation would’ve been a matter of weeks. Anyways, that’s my take. Now I am not a virologist or a microbiologist or even an epidemiologist, but I did see Contagion twice.