Archive for month: January, 2017

Shattering Authoritarian Myths, Clean Saudi Arabia and Higher Education Levels Around the World

We are not one to believe in omens, fate or inevitabilities. When something bad happens to someone and they rationalize the catastrophe by telling us bad things happen for a reason, we wonder if it was the reason that was bad. Others tell us when catastrophe strikes that it is all part of the grand plan, which causes us to want to have a word with whomever is in charge. But when we were cleaning the photos off our phone the other day we came across the image below that we took late in the summer while walking to a Seattle Mariners baseball game. And we wondered if it was not an omen perhaps it was at least a warning of the coming political cataclysms. So even as we vow never to litter internationally, domestically or even galactically, we explore the myth of the successful authoritarian, examine a clean Saudi Arabia and ponder higher education levels around the world. It’s this week’s International Need to Know, a refugee to reason in a complicated world.


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

Shackle the Unfree Thoughts

As we noted last year, millennials support for democracy is lower than other age groups and their fondness for authoritarianism is also greater. And, over the last ten years, with the economic success of China, we’ve heard more and more people express the sentiment that democracies can’t be as successful economically because of all the process and the inability to get things done. We’re all for making ourselves more efficient (see our story on Europe’s more cost-efficient infrastructure, for example), but it is time for a dose of reality on what kinds of countries are more successful. The World Bank’s Doing Business Survey, which ranks countries on how easy it is to do business in them, finds that by far the most successful countries are free. Further, the bottom performers are mostly unfree. Don’t like the Doing Business Survey? Okay, check out the top 20 countries ranked by GDP per capita. Almost every single one of them is a free country. So let’s stop the pining for authoritarianism and concentrate on improving our democracies. 


A Clean Saudi Arabia

Even as the United States may pull back on climate change fighting efforts, other countries are full steam ahead (powered by renewables, of course), including Saudi Arabia. Fortune Magazine tells us that “Saudi Arabia will launch a renewable energy program in the coming weeks that is expected to involve investment of between $30 billion and $50 billion by 2023, Energy Minister Khalid al-Falih said on Monday.” Currently the country produces less than 1 percent of their energy from renewable sources but they plan on changing that, especially since energy demand in the country is growing at an 8% rate. They are also hoping to team up with other countries in the region such as Yemen, Egypt and Jordan in the push for renewable energy. We note that one of the forms of renewable energy Saudi Arabia is exploring is nuclear, which is likely to create angst in some quarters. They are exploring partnering with China on the nuclear energy initiative. The world, it’s a changing fast.

Primarily Secondarily

We’re involved with a project that has us reading about and researching higher education which led us to discover that Korea has the highest percentage of their population with a postsecondary degree. This is helpful because more and more of the jobs in the future are going to require such an education level (or a robot—we need our people to get smarter and our robots dumber. If it weren’t for the Flynn Effect, I’d swear the opposite is happening). Canada is second followed by mighty Luxembourg and the fighting Irish. Italy, which we are increasingly worried about (remember our warnings about GDP and banking), brings up the rear. 


Canada Compared to Venezuela, China a leader on free trade (??!!) and the world’s third most important graph

New wood floors are being installed here at INTN’s global headquarters. This has wreaked havoc on house, computer and cats, the last of whom are most upset by the upheaval. Willow hides in the basement while the ever sociable Putter tries to hang out with the workers, but is apparently overcome with anxiety causing the poor feline to vomit repeatedly. Fortunately so far he has restricted his regurgitations to defacing the old floors though we tremble at what is to come. In the midst of it all, as we attempted to write this missive among saws, hammers and other noise, two salesmen came to our door wanting to talk to us about switching over to their cable company. When we attempted to explain to them this was not a good time (this should have been abundantly evident by wood, laborers and the general construction mess surrounding them on the front porch), they insisted their information was vitally important and we must talk to them right that minute. It was then that we wished we had trained Putter to vomit on cable company salesmen. So even as we call in the cat whisperer for expert advice, we compare Canada, Venezuela and iPhones, snicker at the idea of China as the leader of free trade and present the world’s third most important graph. It’s this week’s International Need to Know, purring with world information intended to scratch your fancy. 

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

Canada, Venezuela and iPhones

Last year we took to task a news organization for saying Venezuela’s economic problems are due to low oil prices. Canada is a great example of what we’re talking about. Canada, like Venezuela, is also a big oil exporter and certainly its economy suffered when oil tanked in 2014. But, because Canada has economic policies that are not crazy, their economy did not and would not suffer like Venezuela’s. In fact, Canada’s business confidence is at its highest level since before the oil crash and its economy added the most number of jobs since 2012. Meanwhile, it costs $98,000 to buy an iPhone in Venezuela. Canada is also preparing for President Trump by naming Chrystia Freeland* to be their new Foreign Minister. She led the charge in getting the Canada-EU free trade pact approved. With a good chance NAFTA will be torn up by Trump, she would have chief responsibility for negotiating the new pact. By the way, NAFTA was essentially an addendum to the U.S. – Canada Free Trade Agreement which would still be in force even if the new Trump Administration ends NAFTA. And when we talked with the Canadian government recently, the official indicated it’s probably time to update the agreement anyway. After all, many industries didn’t even exist when that free trade agreement was approved. Venezuela meanwhile is in no position to negotiate free trade agreements or much of anything else. It’s not about the oil.

*It’s worth noting that Freeland, of Ukrainian heritage, has been banned from traveling to Russia for her anti-Putin views.


China’s the Leader of Free Trade?

After his speech at Davos, there’s been lots of talk about China’s President Xi Jinping leading the world’s free trade movement since the U.S. is abandoning that role. President Xi certainly talked about the importance of free trade in his speech but his country doesn’t walk it. In fact, a good argument could be made that China is the most protectionist country in the world, or at least vies for the title with India. The “Global Mercantilist Index” ranks those two countries one and two (see chart below) for most protectionist. Even if we look at simple tariff rates, never mind all the non-tariff barriers, China is at best middle of the pack, behind such free trade stalwarts as Belarus, Nicaragua and Moldova. Or, look at China’s new cybersecurity law which will go into effect on June 1st of this year. The new law “imposes new security and data protection obligations on network operators, puts restrictions on transfers of data outside China and introduces new restrictions on critical network and cybersecurity products.” More than one China expert we’ve spoken with notes that the law is designed to bolster China’s local industry and cut out foreign companies. The world is changing but not so much that China is really the leader of the world’s free trade movement. That’s being led by a lovely couple in a small town in Chile out of their third-story apartment.

Rankings of Protectionist Countries



World’s Third Most Important Graph 

Last year we presented the world’s fifth most important graph. Today, we present the third, which arguably, like a college football BCS playoff argument, could be ranked higher. Either way, peer below and gaze on the factor that is driving so much of what is happening in the world today, including in the United States–the global labor share of corporate production has been decreasing since the early 1980s. Two economists at the University of Chicago crunched the data and found “of the 59 countries with at least 15 years of data between 1975 and 2012, 42 exhibited downward trends in their labor shares.”  Oh, and by the way, it’s not just in developed countries like the U.S., Germany and Japan–China is seeing the same trend (see second graph below).  Trends end eventually, as the Seattle Seahawks painfully learned this season. Whither and when this one is a crucial question for our future.


Auto jobs, Solar in the Developing World and Ending Malaria

Our world is awash in challenges, from global health problems to climate change to economic hardship. Fortunately, there are very smart people working on these problems at some of our finest institutions. For example, two scientists at MIT, noting that people felt 2016 was an especially bad year for celebrity deaths, decided to calculate whether it really was such a bad year and whether coming years will bring even proportionately more celebrity deaths. At the link you can see all the math, charts and graphs but the bottom line is the number of famous people dying each year is increasing because each year there are more famous people than there used to be. 2016 seems particularly bad because there were more “especially famous” kicking the bucket.  But rest assured, the MIT researchers tell us, we do not need to worry about more and more famous people passing away each year because “we may soon reach a time when what will limit the number of famous people we produce will no longer be our means of communication, but our limited attention and human memory.” Even as we forget the name of that singer who died last week we remember to tell you of automobile jobs around the world, the use of solar in developing countries and great progress on malaria. It’s this week’s International Need to Know, working for our star on the Hollywood Walk of Fame one data chart at a time. 

Auto Jobs

Automobile manufacturers have been in the news recently as people assert where cars should and should not be built. This got us to thinking about which countries manufacturer the most number of cars and which countries have the most automobile industry workers. These two lists are very different with the exception of China and the U.S. claiming the top two spots on both (see table below). Russia has the fourth-largest number of auto workers even though it’s not even in the top ten for auto production (Putin’s regime ranks only 14th in production). Mexico is the seventh-largest producer of cars but builds these autos with relatively little labor, ranking only 17th in number of workers. We expect the number of auto workers to fall in the coming years as such work continues to be automated. And what will be the effect on the number of autos produced with the advent of self-driving cars and the continued rise of ride sharing? Will China continue to have 1.6 million auto workers? Will Mexico have a larger market share of cars produced than the U.S.? Will it matter in terms of number of workers? We need Marty McFly’s DeLorean to find out, or, alas, merely wait a few years.


Let’s Get Lit

In writing in this space about the ongoing solar power revolution which is on pace to take over energy generation in the world over the next 15 years, we did not concentrate on those who do not have electricity. Not to beat up on ourselves since we’re certain there’s plenty of people eager to do so themselves, but that’s a lot of people not to concentrate on. There are still about 1.2 billion people in the world without electricity, most of whom are in Sub-Saharan Africa but also 263 million people in India remain electricity-less. Fortunately, there’s also a big effort to provide these people electricity, and most of that will be in the form of solar. Currently those without electricity often get their power and heat by burning biomass which is bad for their health and bad for the environment. So this new age of solar power is not only a game changer for how we get our power but also for providing power for those who have none at all. 



The Continuing Campaign Against Despair 

In our continuing campaign to remind ourselves and the world at large that we live in the most peaceful, prosperous, healthy time in history, below we display a graph showing the remarkable decrease in global malaria deaths over the last 15 years. Malaria deaths during that period fell by 66% among all age groups and by 71% among children. And there are efforts to make even more significant progress in the coming years, including progress on a new vaccine. We jump into cesspools of doom and gloom with the best of them but today and most days we can dry ourselves off with towels of good news, including the news of great progress on malaria.


China’s bitcoin, Acid Improvements and European Infrastructure

Perhaps it’s due to our having a cold for over a month (a viral metaphor for the late, lamented 2016?) but we’ve been obsessed with the video of Patti Smith performing Bob Dylan’s A Hard Rain’s Gonna Fall at December’s Nobel Prize Ceremony. It’s a powerful performance made even more so when Smith falters with the lyrics, a moment of great humanity as she is picked up by the audience and the musicians. It was perhaps a moment that illustrated the best of humans. And, of course, the song itself is pure brilliance and a wonderful testament for why the Nobel Committee chose Dylan in the first place. And then we watched the video again…and again…and again…We watched it probably 30 times over a three day stretch and slowly it dawned on us that the performance, the setting, the people (kings and queens and elites of every stripe), the song, the temporal distance from the writing of the song, the ages of performer and audience are all like a great painting from one of the masters, depicting where we are, where we have arrived, in this new era as the old one and its post-World War II structures pass away, with all the contradictions, laments and triumphs found in such a moment. Perhaps it is not surprising that this moment, this video, sprung from an artist of such profound contradictions and contrariness, that even today, Dylan, something originally rooted in Dylan, could evoke so eloquently our time. But neither hard rain  nor the current chilly weather freezing our worldwide headquarters stops us from our international rounds examining bitcoin and China, the great worldwide acid achievement and Europe’s more cost efficient infrastructure. It’s this week’s International Need to Know, providing nutritional substance about the world even as McDonald’s opens near the Vatican

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

Capital Controls, Bitcoin and China

Caesar once claimed all roads led to Rome but today all roads lead out of China, at least for capital, and bitcoin is increasingly becoming an avenue for that capital emigration. Yes, it’s a new year but wealthy Chinese are still working to get their money out of the country. Bitcoin is trading at its highest level in three years at over $1000, increasing by 125% in 2016. China is the largest reason for the increase in value (with a big assist from India and its demonetization). Four years ago China bitcoin usage surpassed the U.S. and the gap is growing as you can see in the chart below. China’s government is instituting new controls on currency exchange which they are pointedly saying are not capital controls. But one person’s currency control is another’s capital control. Even if the government does institute capital controls, with bitcoin and other creative methods available to the wealthy and wise, we put our money on those trying to get theirs out of the country. We can’t verify it, though we can now read it using the much improved Google Translate, but one local Chinese news source claims Chinese buyers are 90% of recent bitcoin volume. We flipped the calendar to a new year but the issue of capital flowing out of China remains.

Acid Levels Down to Pre-Industrialization Levels

Among some there is a doomsday attitude towards climate change, believing that it is unlikely we will curb emissions in time to ward off the worst impacts of climate change. Maybe so, but there are many precedents for humans taking action that made a positive impact on the worldwide environment and we learned of another one while sipping eggnog during the holiday season. Did you know (we certainly didn’t) that acidity levels in the atmosphere are down to preindustrial levels?Science Bulletin informs us that “New research shows that human pollution of the atmosphere with acid is now almost back to the level that it was before the pollution started with industrialisation in the 1930s.” E.U. and U.S. clean air laws deserve much of the credit, according to the article. Acidity pollution peaked in the 1960s and 1970s and has been falling ever since. We are more optimistic than most that climate changes emissions will start falling soon due to technological advances no matter recent acidic electoral events.


Building Europe

When traveling to Europe, we often hear Americans complaining that their infrastructure, especially transit infrastructure, is better than in America. And it probably is. European infrastructure is also less costly to build…by a lot. Over at Vox, Matthew Yglesias notes this fact in talking about how expensive the Second Avenue Subway in New York City is costing to build, clocking in at $2.2 billion per kilometer. By contrast, in Berlin it costs $250 million per kilometer, in Paris $230 million per kilometer and in Copenhagen (one of the world’s most expensive cities), it costs $260 million per kilometer. Yglesias speculates that “paradoxically” the weakness of labor unions contributes to the higher costs of building infrastructure in the U.S. We have heard from others, including in the environmental movement, that Europe’s approach to environmental protection, while every bit as effective as America’s, is more cost efficient. Whatever the reason for being more cost effective, the world could take some pointers from Europe on infrastructure building.