Archive for month: November, 2018

Wrong Mental Image of World, Drone on about Singapore, and Who is Digitally Competitive

We are reading a wonderful book, A Gentleman in Moscow, about an aristocratic Russian Count who after the 1917 revolution, has his life spared by the Bolsheviks but is essentially placed under house arrest the rest of his life in the Metropol Hotel, where in 2005, we once stayed of our own free will. The book charts a wonderful evolution of the Count, who as the revolutionaries become worse and worse, he becomes better and better. The novel has been a wonderful companion while we played a small part in assisting someone through a troubled time, including through our tangled, corrupt health care system. Our view of this person has changed often during the process, which is more a reflection of our shortcomings than any they may have. Indeed the Count has similar thoughts in a much more dramatic situation than ours and comments during the novel, “By their very nature, human beings are so capricious, so complex, so delightfully contradictory, that they deserve not only our consideration, but our reconsideration—and our unwavering determination to withhold our opinion until we have engaged with them in every possible setting at every possible hour.” And so too our world where we reconsider people’s mental images of the globe, the delightfully contradictory wagers on Singaporean technology and the complex digital competitiveness of countries. It’s this week’s International Need to Know, the Count of international data, the Baron of international information.Without further ado, here’s what you need to know.

Your Mental Image of the World is Likely Wrong

Along with our astute INTN readers, we like to think we have a pretty good understanding of the world, including basic facts about its geography. But more than likely we are overconfident in our knowledge as this National Geographic article illustrates. For example, the article informs us that most people think all of Africa is below the equator. But that is not true, around two-thirds of Africa is north of the equator. And the venerable old publication also notes that most people believe Europe is essentially at the same latitude as the United States but is actually more contiguous with Canada: “Paris is further north than Montreal, Barcelona is at a similar latitude as Chicago, and Venice lines up with Portland, Oregon.” People think these European locations are further south because their weather is warmer. But these warmer climes are due to the Gulf Stream bringing warmer currents, not because of the cities’ latitudes. What other knowledge do we all possess that we are overconfident about?

We Drone on About Singapore

Singapore has long been our bet for where autonomous vehicles will successfully be commercialized first, but Waymo is costing us money by preparing to commercialize autonomous taxis next month in Phoenix. (Now that we can legally bet on sports, when will we be able to wager on technology? Oh, wait that’s the stock market). But, rising out of the phoenix of autonomous vehicles, Singapore appears to lead in deploying drones. According to the South China Morning Post, “Companies have already started testing the devices for commercial use, mainly in an area of over 200 hectares (500 acres) dotted with high-rise buildings and shopping malls, specially designated by the government for the trials.” In Singapore they are concentrating on activities such as package delivery and security. One of the delivery tests is being conducted by a hospital to transport blood samples and specimens which obviously requires high safety standards. It’s one thing to have Amazon accidentally drop some fuzzy slippers on you, another to have blood douse an innocent bystander. Keep an eye on Singapore’s drone efforts, perhaps using a drone equipped with a camera.

Singapore launches drone experiment BBC News

Watch the Video

Who is Digitally Competitive?

Madonna is wrong, or at least out of date*—we live in a digital world, not a material one. Or so it seems when I’m at the barbershop and everyone gazes down at their smartphones, scrolling, scrolling for that next bit of digital serotonin. So which countries are the most digitally competitive? The IMD World Competitiveness Center’s 2018 rankings unsurprisingly has the U.S. at the top. However, would you have guessed Singapore is second? Actually, that’s not too surprising either. In fact, one must scan down to number 17 to find the first true surprise with the UAE ranked above countries such as Germany, Japan, Ireland and Estonia. IMD’s rankings are based on factors such as the availability of talent in the country, quality of education, regulatory environment, availability of capital and level of adaptability in integrating technology into its economy. If one took only the urbanized part of China, we expect it would rank in the top ten.

*As is this joke but we couldn’t come up with a Lady Gaga gag

Economic Gravity, Open for Business, Amazon’s Global Reach

At the risk of offending a large segment of our readership, we dive into dangerous waters. We don’t mean to speak ill of the recently deceased and may Stan Lee rest in peace, but a statement from Lee condemning bigotry we have seen repeatedly on social media is what is wrong with his work, or rather what is distressing about how pervasive comic book sensibility has become in popular culture over the last two decades. Lee paints a comic book picture of bigotry. The biggest challenge we face from bigotry/prejudice is not in your face racism and antisemitism of the likes of Charlottesville, it’s the more more subtle institutional racism found in housing policies, hiring practices and other areas that create different economic castes, especially for African-Americans. Yes, we need to condemn blatant racism such as what happened at Charlottesville (the lowest of hurdles that our current president could not jump over), but tackling the more subtle racism will provide far more benefits to society. We do not begrudge Lee for the “universe” he created and are glad so many children and teenagers were so entertained by it. But other than George Lucas (and now we’ve offended the rest of our readership), has anyone else been more responsible for the infantilization of American popular culture and all the associated effects of that phenomenon?  We take an adult’s eye view of economic gravity, are mature about who is open for business, and with nothing but sophistication examine Amazon’s global reach. It’s this week’s International Need to Know, eliminating the “pows” and “kabooms” from international analysis and data.

We’ll be busy making cornbread stuffing for Thanksgiving next week–we’ll be back on November 29

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

Economic Gravity and The 3rd Most Important Question

The current U.S. president is an accelerator of global trends that were going to occur anyway, they just are happening more quickly because of him. This is because the world, or at least the world’s economy, continues to shift on its axis. We remind you in the graphic below that the economic center of gravity in the world has been shifting back towards Asia. The U.S. President not participating in the ASEAN Summit in Singapore this week, or the APEC Summit in Papa New Guinea, are more examples of his “nationalist” approach and abdication of U.S. leadership in the world. All of it accelerates China’s efforts to exert leadership and other countries finding new ways to thrive and survive in the world, ones that don’t include the U.S. in the equation. In Singapore, China will push its Regional Comprehensive Economic Partnership, a trade deal to rival the Trans Pacific Partnership (TPP). You remember TPP, the trade deal the U.S. pulled out of in 2017 and that has been ratified so far by seven of the 11 countries in the pact, awaiting approval of only Brunei, Chile, Malaysia and Peru. China aims to supplant TPP. Either way, Asia has set sail with the U.S. ashore. Economic gravity has shifted to Asia and so too will political gravity, it’s just happening sooner than expected. The big question is how much will that line in the economic gravity map turn south which is to say how fast will India grow over the coming years? India is about to surpass Britain in GDP, the country that once ruled it. And politically, India is the world’s largest arms importer and has the fifth-largest defense budget. Whither India is one of the three most important geopolitical questions of the next twenty years.

McKinsey calculated where the economic centre is “by weighting national GDP by each nation’s geographic centre of gravity; a line drawn from the centre of the earth through the economic centre of gravity locates it on the earth’s surface.”

Open for Business

When we started our consulting business a few years ago, it was very easy to do with low barriers to creating and running our business. However, that is not true for all businesses as our real estate developer friends are always complaining to us about how hard it is to build a house in the Seattle region. But where in the world is it easiest to do business? The latest edition of the World Bank’s Doing Business report tells us New Zealand is a business person’s dream, followed by Singapore, Denmark (not just a place for social safety nets and environmentalism—something both sides of the politically wide aisle in America could learn from), Hong Kong, South Korea and, of all places, Georgia. Afghanistan tops the list of most improved countries for doing business since last year, followed by Djibouti, China and Azerbaijan, which makes us question the methodology of Doing Business. Actually, in regards to China, it does appear the government has made it easier for Chinese businesses to operate. Now if only they did the same for foreign businesses. Also of note, one-third of all business regulatory reforms last year took place in Africa.

Amazon’s Global Reach

We like and use Amazon but read with some distress that one of its two so-called HQ2 locations will be in Queens, New York. Queens is the last affordable borough in the city and some of New York’s last remaining authentic delis reside there. We fear that neither of those will be true in a few years with Amazon flooding through the borough. But what about the corporate megalith’s global presence?  Which country is the location with the largest number of titles in Amazon’s Prime Library, for example?  The U.S., of course. And next at the top of the list are all English speaking countries, including the UK, Canada (apologies to Quebec), Australia, New Zealand and Ireland. The UK is the cheapest location for streaming a video on Prime, and Singapore and Latvia the most expensive. Last year, according to Statista, the United States accounted for a large majority of Amazon’s revenue, followed by Germany. This includes both ecommerce and revenue from web services (where Amazon currently gains most of its net revenue). The UK and Japan are the next two largest net revenue generating countries and the rest of the world barely totals as much as Germany accounts for by itself. Amazon is a huge American company but not yet dominating worldwide.

Change of the Top Companies, Change in European Cultural Values, Change among Swedish Immigrants

As the media beats the dead horse race of the American mid-term elections, we were reminded of what elections are supposed to be about while standing in line to talk to a health insurance consultant as part of our continuing struggle to restore our left knee to full functionality. A woman who had just finished talking to the benefits consultant walked past us with the look of one trapped in a DMV office for six hours, muttering, “It’s too *&%$ing hard.*” Only a few hours earlier we were helping an international visitor in need of medical help. We brought her to a health care facility who discovered that her insurance, purchased here in America to take care of her during her year-long work visit, did not provide coverage for the medical condition she had. We would not have been surprised if she too felt compelled to utter the same epithet that the other woman did, but she merely muttered, “This would never happen in my country.” The American health care system combines the worst aspects of capitalism and socialism, a Fitzgeraldian irony polishing the American dysfunctional policy shoe, the ultimate dab of the Nurse Ratched policymakers. So we limp into this week discussing change—how much there has been in the world’s top companies, the lack of it in certain European cultural views and how much immigrants to Sweden experience. It’s this week’s International Need to Know, if not trying to cure the world, placing an informational stethoscope to its beating heart.

*INTN is family-oriented. To see the unedited quote you have to subscribe to premium service.

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

A Change is Gonna Come…and Has

We have expressed concern in this space about the incentives and policies that favor large companies over small. In America, everything from land use to the way environmental protection is regulated to patent law gives big business an advantage. However, when we look at the global list of the largest companies in the world as measured by revenue, there has been significant change since 2008. Visual Capitalist graphs this list and finds,“43 of the 100 companies on top of today’s list were not there ten years ago.” Among the biggest changes are the increase in Chinese companies. In 2008 there were only three Chinese companies on the top 100 list, today there are 21. However, all three Chinese companies in the top ten are state owned enterprises such as China National Petroleum. Will they be there in 2028? And despite many people expressing concern over the power that technology companies have over all of us, “only a handful of tech companies have cracked the top 100.” Scan the whole list to confirm or challenge your biases, or perhaps both.

Change Hasn’t Come

Companies change more quickly then culture. This is evidenced in a Pew Global survey of European attitudes on issues such as gay marriage, acceptance of Jews and Muslims, and interest in religion. For example, according to Pew, “Majorities in all of the surveyed Western European countries favor same-sex marriage, while majorities in almost all of the Central and Eastern European countries oppose it.” Just over 73 percent of French people support gay marriage, but a gay couple may want to hold off on buying a cake in Hungary where only 27 percent support gay marriage. Central and Eastern Europeans are less willing than Western Europeans to accept Muslims and Jews into their family or as neighbors (never mind a gay Muslim or Jewish person). Perhaps Muslims and Jews in the Middle East have more in common than they realize. It may not be a coincidence that Eastern Europeans are far more religious than Western Europeans, “majorities say that being Christian – whether Catholic, Orthodox or Lutheran – is an important element of being “truly Lithuanian,” “truly Polish,” etc.” Like the United States, the EU’s constituent parts are very different.

But Change Has Come to Sweden

At first blush, Sweden may seem a homogeneous country that keeps on chugging economically and socially in a calm, never changing way. This is not true. Sweden has changed its economic policies and politics often over the years and over the last few decades has become a large recipient of immigrants. In fact, as a new paper reports, “As of 2016, about 17% of the Swedish population was foreign-born, compared to less than 7% in 1970. By comparison, the share of foreign-born in the United States was at about 13% in 2013.” So how are these immigrants doing economically? Immigrants to Sweden do relatively well when normalizing for starting income. But the paper’s author also reports, ”that immigrant children born into poor families are slightly more likely than similar natives to both reach the top of the income distribution and to stay at the bottom.” They are also considerably more likely to obtain a college degree. Immigrant children coming from “refugee-sending” countries such as Iran, Syria and Bosnia have higher incomes and inter generational mobility than other immigrants in Sweden. Why this is, is a mystery. Or, as the author says, “Further research is needed.” That is something that never changes.

Obedient Dog Owners, Underrated Country Update and Changing Central America

Even as the baseball season has ended and leaves us, as Bart Giamatti wrote, to face the fall alone, a video reminds us of standing outside Safeco Field on a warm summer eve, in a long security line as a recorded voice scolded us regarding the myriad of stadium prohibitions–what we cannot bring in with us, what we can’t say, what we can’t do. Rather than a feeling of welcoming to America’s pastime, instead the aura outside the ballpark is one of entering a federal penitentiary. Ahh, but in China, as you see in the video on Twitter (which we can’t figure out how to embed in this post but urge you to click on the link) when you board a train you are warned “your behavior will be recorded in an individual credit system” and are told how you can avoid a “negative record of personal credit.” And we wonder, as did the person who filmed the video, if this is our dystopian future. We are against this future, at least for the common people, but could see how it might be put to good use for certain public figures, even certain presidents, perhaps. But maybe that is what we are all destined to become: celebrities in a paparazzi, tabloid world, our full foibles, minor and major, tuned into and judged by the whole wide world, or at least by a governing minority. As we duck away from photographers hiding in the hedges, we dive deep into Chinese dog obedience rules and their relation to China’s economy and politics, provide an update on the world’s most underrated country and explain how Central America is changing. It’s this week’s International Need to Know, the Jaime Lee Curtis of international news and data–exposing the demons and welcoming the heroes.

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

Obedient Chinese Dogs, Humans Less So

So about China’s social credit system, where they monitor and grade people’s behavior, ala a certain Black Mirror episode. It has come to our attention that in Jinan, China instituted a dog-owner rating system, monitoring and grading dog owners on walking their dogs without a leash, not cleaning up after them and keeping them from barking. The government claims marked improvement in dog owners behavior since implementing the system (as with economic data, one raises a skeptical eye or perhaps stops wagging the tail). Speaking of Chinese economic data, George Magnus claims further evidence of an economic slowdown by noting that urban employment growth is slowing (see graph below). Urban jobs are mainly service jobs and those, Magnus says, are not as plentiful as before. And yet China is presumably employing more censors. Perhaps they would like to install some in Brazil where a populist (the world overflows with them) has been elected president, one with a distinctly anti-China perspective. “The Chinese are not buying in Brazil. They are buying Brazil,” the new President of Brazil Jair Bolsonaro has warned repeatedly. Which is all to say that China may find dog owners easier to regulate than other countries and their own economy.

World’s Most Underrated Country Update

Back in July, we reported on the undernoted success of Ethiopia—it has been the fastest growing economy in Africa the last ten years among other positive developments—and today we provide an update that reflects both the country’s positives and continuing challenges. A few weeks ago the reform minded Prime Minister* Abiy Ahmed reshuffled his cabinet and appointed a Minister of Peace charged with tackling (what’s a more peaceful verb we could use?) the continued ethnic violence in the country. According to Reuters Africa, “About 2.2 million people out of a population of 100 million have been displaced since clashes broke out last year, many of them between rival ethnic groups.” In addition to striving for ethnic reconciliation, the Prime Minister is gung-ho on gender equality–after the cabinet reset, now half of the ministers are women. And this week the parliament appointed Ethiopia’s first woman president, Sahle-Work Zewde.  Ethiopia has many challenges to face but given its political and economic trajectory we continue to search for an Ethiopian ETF.

*Unlike Saudi Arabia’s ostensibly reform-minded MBS, Ethiopia’s Prime Minister Ahmed has not had any journalists murdered. In fact, since taking office he has freed journalists, bloggers and political prisoners arrested by prior administrations.

Changing Central America

The world is ever changing as we were reminded recently when we traveled to Walla Walla, once a sleepy farming community that is now a hung-over wine oasis with 200 wineries dotting the area. The old cliché is generals are always fighting the last war, which Noah Smith quantifies smartly in terms of immigration and allows us to once again point out there are fewer Mexicans living in America than five years ago. This, as Smith points out, is because Mexico has become richer and is having fewer babies. So fewer Mexicans feel the need to leave their country seeking economic opportunity and more are returning home to take care of aging parents. The same pattern, Smith shows, is emerging in Central American countries—El Salvador, Honduras and Guatemala. In each of these countries, as in Mexico a generation earlier, fertility rates are falling rapidly. At the same time, GDP is rising rapidly and is crossing the $8000 per capita mark, a point at which populations’ emigration levels usually start decreasing. Like most parts of the world, Central America is not static, it is ever changing—and so too will the U.S. immigration debate ten years from now.