Archive for month: August, 2018

Mighty Maya, Russia’s Rodney Dangerfield, China’s Data Problem and Japan’s Flying Cars

You may remember well over a year ago our young six-year-old friend, Maya (now 9???!!!), was battling cancer. Due to her resilient spirit and the good people of Seattle Children’s Hospital, Maya is cancer-free. You may also remember that the musician, Amos Lee, visited and became friends with Maya through the Melodic Caring Project, a wonderful nonprofit that “teams up with local and nationally touring artists to bring love and encouragement to children and families by streaming the healing power of music to kids in their hospital room or homes.” Last year at a sold out Benaroya Hall show, Amos debuted a song he had written for Maya called Little Light. We are happy to inform you that Amos’ new album, New Moon, drops tomorrow. On that album is the song, Little Light. It’s a ripping, inspiring, toe-tapping number that, of course, has special meaning here at the INTN worldwide headquarters. Give it a listen, clap your hands and consider buying the album and donating to the magnificent Melodic Caring Project. And as you do, we shine a little light on Russia’s Rodney Dangerfield, the real problem with Chinese data and Japan’s flying cars. It’s this week’s International Need to Know, the uplifting source of all the healthy news of our world.

Amos tells the wonderful story of meeting Maya, song begins at 2:53
Amos Lee, Jefferson Center, Roanoke VA 11-1-17

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

Russia’s Rodney Dangerfield Effect

Our American readers undoubtedly have strong opinions on whether Russia interfered in the 2016 presidential election. But what do Russians think? As it turns out, an overwhelming majority of Russians—71 percent—“think Russia did not interfere in the American election,” according to a Pew Global survey. Russians 59 years old and older, are even more likely to think Russia is innocent of such interference (77%). Apparently Russians, especially older ones, like the current U.S. President, do not believe U.S. intelligence reports. The Pew survey is chock full of interesting data, including that 80 percent of Russians “see NATO as a military threat, with 45 percent stating it is a major threat.” Russians have also succumbed to the musical charms of Aretha Franklin with nearly two-thirds saying Russia does not get enough respect around the world. Russians are also concerned about inflation with two-thirds worried about it despite inflation rates returning to lower levels almost two years ago. High inflation, more than many economic maladies, appears to have a longer shelf-life for ETSD (Economic Traumatic Stress Syndrome).What Russians think and what is accurate are often not the same thing, but understanding what Russians believe is important, so read the whole survey.

The Real Problem with China Data

We originally joined Twitter to more easily follow our beloved Seattle Mariners (an unrequited love given they are on the verge of missing the playoffs for the 17th straight year). Since then we also follow a number of other Tweeters on other subjects, including China watchers. But we rarely post and even more rarely comment on others’ post. But last weekend we clicked on a link in a post to an article by Nicholas Lardy explaining worries that China’s economy is cooling because investments are down are not true.  As Lardy explains it, the methodology China has used for counting fixed asset investment has changed this year. Previously the Chinese government’s method “involved considerable double counting, which the authorities are paring back.” All well and good and a helpful explanation about investment not decreasing and makes us feel better that current Chinese growth is not slowing dramatically. But, we tweeted back, “If fixed investment was being double counted and no longer is, what does that say about economic growth when such investment was being double counted?” Nobody replied to explain. We agree with Lardy that China bears are overwrought but for China to be a true world leader, they will need more transparency, including and especially in their economy.

Here’s Your Flying Cars

Where are the flying cars? We’ve heard a number of people ask that who believe technological progress has been too slow.. Do not fear, the Japanese government is listening.  According to Bloomberg, Japan is working with a consortium of companies to develop flying cars in the next decade, both to alleviate traffic congestion problems and to help Japan’s industry keep up with technology. Among the companies Japan is partnering with is one just up the road from us, Boeing, as well as Uber, Toyota and others. In fact, the consortium of companies and the Japanese government met yesterday to begin “charting a road map” for the technology. Putting aside the backwards use of a metaphor,  the Japanese government push–they will set safety standards, and take care of other regulatory matters—is much needed if this new technology is to take flight soon (now that’s a more apt metaphor).


Sweet & Sour Mysteries of China, Definition of “Is” and Missing European Unicorns

Perhaps nothing is missing more from public life, in our discourse, on social media, in policy discussions, debates, arguments, writings and verbal jousts, than humbleness. Name the issue or the movement, and they could all use a bit more of it. People are more convinced than they should be that they are correct in their opinions. This despite life continuing to prove otherwise nearly every single day. We ourselves here at INTN are in need of more humblesness as much as anyone. For instance, we once asserted very confidently to anyone who would listen that Jim Converse would win the Cy Young Award before his career was over. Who, you may ask? Exactly. And yet even we continue to make statements like we know what is going on. And policy makers, reporters, politicians and others appear to be even more confident than we are. So we remind all of us, as we once wrote in this space over two years ago, that the three most underused and yet most accurate words in the world are, “I don’t know.” But we are sure we will describe the sweet and sour mysteries of China, question the definition of “is”, and search for the missing European unicorns. It’s this week’s International Need to Know, the world’s most humble analysis of, well, the world.

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

Sweet and Sour Mysteries of China

China’s reemergence as a global power brings with it a more assertive role on the world stage and resistance to these moves, all enveloped in the continuing mystery that is the world’s largest country. Forthwith we bring to your attention the The Strange Case of the Stolen Chinese Art and the Mysterious Unmasking of Chinese Hackers. First we point you to a fascinating article in GQ of all places about Chinese art heisted from museums around the world. The article’s author suspects the Chinese government is behind the thefts in an attempt to retrieve art the western world took from China during its down years: “In each case, the robbers focused their efforts on art and antiquities from China, especially items that had been looted by foreign armies. Many of these objects are well documented and publicly known, making them very hard to sell and difficult to display. In most cases the pieces have not been recovered; they seem to simply vanish.” Paging the Chinese equivalents of George Clooney and Sandra Bullock. Second, the online tech publication Motherboard describes a mysterious group revealing the names of Chinese hackers: “Since April last year, a group calling itself ‘Intrusion Truth’ has trickled out the real names of hackers working for Chinese intelligence. Recently the group has ramped up its efforts against a Chinese operation targeting governments and businesses.” In recent years, Russia has received the lion’s (bear’s?) share of attention for cyber shenanigans, but China also has a robust cyber espionage machine, especially and including industrial cyber espionage. Now somebody is fighting back, in the form of Intrusion Truth. The golden BRIC road to the Chinese Century will be littered with such stories, mysteries and wizards. Enjoy them.

It Depends on What the Meaning of “is” is

There has been much talk of socialism in recent months with U.S. congressional candidates proudly claiming the moniker and others attacking them vociferously for doing so. Of course, much of this is due to a confusion of terms. Most of the candidates are not arguing for nationalizing companies but rather to adopt “social democracy” along the lines of a variety of northern European countries. And this is where we enter INTN territory. Many on the right decry these northern European countries as un-free. And yet, as Will Wilkerson points out, the Heritage Foundation’s Economic Freedom Index ranks most of these countries ahead of the United States. Denmark, Sweden and Iceland are all more economically free, according to Heritage—a conservative organization, whatever that means in this day and age—than the United States. As Wilkerson notes, they “outscore the United States in the security of property rights, ease of starting a business, openness to trade, and monetary freedom (a measure of inflation and price controls).” So which countries are “socialist” and which are “capitalist” and which are more free or less? In our estimation, 37 percent of policy misunderstandings are due to inaccurate use of labels.

The Missing European Unicorn

We are not a fan of the term “unicorn.” We strive to excise it wherever we find it, whether in sports, business or even Harry Potter books. But it is interesting that the EU continues to lag far behind the U.S. and China in the number of companies valued at $1 billion or more. In 2017, the U.S. had 109 such companies, China was home to 59 and Europe only 26. And Europe lags behind in companies valued at $100 million or more as well. Why? A Bloomberg article notes that the EU is still a compilation of nation-states rather than a unified whole. One grows a company in Germany but it is still difficult to expand it into France, Italy and Poland. Whereas a Chinese or U.S. company starts with a large market to begin with, no matter which province or state where it is headquartered*, and then can expand overseas. In addition, EU companies still receive less venture capital, “Last year, 3,500 European companies received a combined $19 billion in venture investment. Although that pales next to China’s $40 billion and America’s $67 billion, it’s a record for Europe and four times greater than the figure from five years ago.”  Whatever the reasons (and, of course, it is plural–don’t be seduced by the tyranny of narrative**–there are almost always multiple factors for something, not one overarching narrative), these reasons are why China and the U.S. (and perhaps some day, India) will be the drivers of global business whatever their own challenges.***

*Well, maybe not Mississippi

**We hope one day to write a book about The Tyranny of Narrative, we hope you will buy it when we do

***They are many

Iran’s Basic Universal Income, the Graying of China and Wage Stagnation is Worldwide

In reading up on a topic in Science Direct, which we report on in the first story below, we stumbled upon this paper that claims children who are taught to lie increase their reasoning abilities. Or as the paper states, “There is some evidence that deception and cognitive skills may be linked during childhood. A number of correlational studies have shown that young children who have relatively strong executive function and theory of mind skills are more likely to tell lies and are better at maintaining the lies they have been told…” This is one of the more disturbing and depressing notions we have learned in 2018 so far. And yet, perhaps it explains much of what happens in Washington, D.C., and all of what happens in Hollywood. Or, are we lying to you about this study? While we await your answer we announce that this is income week here at International Need to Know. Our three stories below focus on income, or in some cases, the lack of it, for the young, middle-aged and the old. We turn our truthful eyes to the surprising place where a universal basic income has been instituted, gaze upon a method China is using to deal with an aging population and put a magnifying glass to wage stagnation in the developed world. It’s this week’s International Need to Know, displaying a child-like interest in the world.

But first, with deepest, deepest, respect–the incomparable Aretha Franklin. RIP

Aretha Franklin – Bridge Over Troubled Water

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

Iran’s Universal Basic Income

Fears of robots taking jobs has prompted talk of the need to institute a universal basic income. Putting aside for the moment that, as of yet, robots are not massively replacing humans, so current robotic deployments are not a reason to institute a universal basic income, one of the fears of such a policy is it would discourage work. Lazy Ed down the street would take his basic income and play video games all day rather than finding a job, or so the theory goes. But did you know that in 2011, Iran, of all places, instituted a universal basic income? They did so when replacing a large scale energy subsidy policy. “In 2011, Iran started monthly deposits of cash into individual accounts covering more than 70 million people and amounting to 28% of the median per capita household income.”  A paper was recently published in Science Direct that finds “no evidence that cash transfers reduced labor supply, in terms of hours worked or labor force participation. To the contrary, we find positive effects on the labor supply of women and self-employed men.” This is a surprising result, at least to us, who were one of those expecting such a policy to be a disincentive to work. We do expect more disruption to the labor market from automation in the future. Perhaps a universal basic income will be a possible remedy after all, although we await further study of Iran’s program.

Solving the Graying of China

In some people’s view of the world, China is an all-powerful entity, organized and run better than the democracies of the world. And though China has been remarkably successful the last 40 years—since discarding ideas some are now advocating to get elected to the U.S. Congress—the truth of China is more prosaic, or at least complicated. It is seizing opportunities but also grappling with difficult challenges.  One of those challenges is the graying of its population—17 percent of China’s population is over the age of 60 (15 percent of Americans are 65 or older). Sixth Tone reports that “according to the Chinese Academy of Social Sciences, by 2022, retirees will be growing at a 3 percent faster rate than pension fund contributors.” How to confront this inconvenient fiscal fact? Sixth Tone also tells us that the Chinese government has developed a reverse mortgage initiative for elderly Chinese. China’s State Council encouraged “anyone aged 60 or above with full legal ownership of a property…to apply for a reverse mortgage.” Thus far, very few Chinese are taking up the government on the offer. Or as Sixth Tone poetically puts it, “The public’s response, however, was the equivalent of a single ripple in a vast, otherwise glass-surfaced sea. As of this May, there is only one insurance company in all of China that offers reverse mortgage services, and only 132 people have taken out policies.” China is one of many countries struggling to figure out how to deal with an aging population, but they are the largest, and perhaps, the most important. Our aging, near-sighted eyes will continue monitoring it.

Wage Stagnation is Worldwide

Our American readers are surely aware of the slow wage growth in this country. But perhaps it is not as well known that this is a phenomenon around the world. The OECD (Organization for Economic Cooperation and Development), a consortium of 35 mostly developed countries, recently noted that among these countries, “Wage growth remains remarkably more sluggish than before the financial crisis. At the end of 2017, nominal wage growth in the OECD area was only half of what it was ten years earlier.” This is especially true for the lower rung of wage earners. What’s causing this wage stagnation? The OECD asserts, “Low inflation and the major productivity slowdown have contributed to wage stagnation, as well as a rise in low-paying jobs.” Much of what is dividing America also afflicts the rest of the world. We may all become Iranian some day.

Buying a Chinese Condo, The Young & the Restless and Size Matters

A friend on Facebook (which is to say they are a Russian spy), linked to a New York Times article (recently bought by Pravda) about a woman who was arrested after leaving her four-year-old son in the car in the parking lot on a cool day with the windows ajar and child locks engaged. Our Facebook friend was outraged at the woman’s arrest, and for good reason. A couple years ago we protested a “driving while using our cellphone” ticket (as in all matters, we were completely innocent) and while we waited watched the case before ours where a sixteen-year-old girl had been arrested for being in a park after dark. The girl was accompanied in court by her Mom, and was let go eventually with a fine. We found the fact she was arrested at all to be ridiculous. If she was in the park after dark, just tell her to get out. Everything is criminalized in America nowadays. A book that, full confession, we have not read but confirms our bias (even INTN is susceptible to bias) so we quote it anyway, asserts that the average American commits 3 felonies per day without knowing it. So even as we aim to commit a fourth infraction today, we discuss China’s household debt, explore the young of Africa and examine where size matters. It’s this week’s International Need to Know, the Jesse James, Pretty Boyd Floyd, John Dillinger of international information and data.

PS INTN will be MIA next week but back the week after.

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

How Many Miles Do I Earn Buying that Condo?

As the U.S. slid into the Great Recession in 2007, U.S. household debt was both a worry and a possible culprit for the cause of the economic destruction. In the ensuing years, Americans deleveraged though recently we are again incurring more debt. But what if we told you China, the land of the great saver, now has a household debt to income ratio larger than the United States? Actually it’s Christopher Balding telling you in an article in the Nikkei Asian Review, “Despite China’s reputation as a nation of savers, its households embarrassingly now hold more debt than those of the U.S. and Japan…” Chinese are still savers but they are also on a borrowing binge, with household debt growing around 20% per year. Much of this borrowing, including worrisomely borrowing on credit cards, is focused on buying housing which has been such a great investment for Chinese over the last 20 years. We sometimes view Balding as being too hard on China, but the household debt situation is one to keep an eye on.

The Young and the Restless

Last week we wrote of the underrated Ethiopia, touting as one of its assets its young demographics. As it turns out, the ten youngest populations are all located in Africa with Niger* the youngest, followed by Uganda, Chad and Angola. The African Institute for Development Policy (AIDP) considers these demographics with both a dose of optimism and worry. It notes, as we have, that there is a demographic dividend for young countries since GDP only grows through a combination of increased productivity and increased working-age populations. These young African countries will all have growing working age populations in the coming years. But what about productivity?  As the AIDP notes, “What kind of future is in store for another billion plus African people? The answer to this very much depends on the policies that Africans undertake to ensure their populations receive quality education, affordable and quality health care, decent jobs, and so on. The demographic dividend is neither guaranteed nor is it automatic.” Perhaps Ethiopia will be a model for them as early Asian Tigers were for countries throughout Asia.

*We recently discovered the Niger musician, Bombino.  As you see in this video, he’s a revelation as a guitar player and performer. 

Bombino – Adounia Idagh-Live musée des confluences Lyon

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Size Matters

Speaking of population, there is increasingly a change from worries about overpopulation to trying to increase the size of a countries population. Japan, of course, started shrinking a couple years ago. But China has concerns too, thus the end of the one-child restriction in 2016 changing to allowing two children per family. Now some are calling for even that more lenient restriction to be abolished. China’s slowing population growth is creating a variety of challenges, including an aging population. The situation has become so dire that, according to Inkstone News, the province of Liaoning is considering paying people to have babies.” Desperate for a baby boom, the local government is exploring ways to reward couples for having a second child, which may include tax, education and housing benefits, according to a development plan released this month.” The province is desperate because the region’s fertility rate is only 0.9.  We expect China’s central government to weigh in on this issue soon.