Archive for year: 2018

Back before the current Russian shenanigans, for work we traveled to Russia.* The Russian Far East, to be precise, not too distant from Siberia. In the middle of Winter. It was so cold we were unable to walk outside wearing our then metal-framed glasses because they would stick to our face. But that’s not the coldest we’ve ever been in our life. No, that would be on opening day of the baseball season in Seattle at Safeco Field, back in 2000. Granted we had not dressed adequately for the occasion, but still, it was Russian cold in the stadium that day. So it is with our usual false spring baseball optimism (it’s been 17 years since the Mariners have made the playoffs but this time of spring we pretend this is the year) that we prepare to attend tonight’s opening game of the Mariners, mixed with some practical wisdom of wearing at least four, maybe five, layers. We will enjoy the annual ritual of the players running onto the field, the inspiration of the child suffering a life threatening disease who gets to run around the bases and the well-earned nostalgia of hearing the recorded voice of the late, great Dave Niehaus. But we hope to enjoy it all while not freezing like a Russian winter. Meanwhile, we warm you up with the Complexity Index, throw heat on China trade surpluses and blow up the trend of ever bigger cities. It’s this week’s International Need to Know, never throwing bean balls but sometimes a stray slider of international news and data.

Macklemore and Ryan Lewis – My Oh My (Officia…
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Without further ado, here’s what you need to know.

We Simply Offer the Complexity Index

We’re a sucker for an index, both the kind found at the end of books (how many times was Churchill referenced in that World War I book?) and the economic ones. So we were intrigued when we recently stumbled upon the Economic Complexity Index, which attempts to measure how complex (i.e. diverse) a country’s economy is. It does so by measuring how many different products and services a country exports and comparing that to how many other countries make those particular products and services. Places like Switzerland, Japan and the U.S., which produce a diversity of products and services and export them, are higher up on the Index, while countries such as Zimbabwe, which make very few products, rank low on the index. Below are the top ten countries for 2016. The Harvard Center notes that China has regressed in recent years and India has moved up the rankings, which they believe portends slower growth in China, and increased growth in India. We’ve already noted for other reasons that China’s growth will be slower in the future, whether official statistics show this or not. Here is perhaps more evidence.

Deficits, Technology, Today, Tomorrow, 

We have long called for a Sabermetrics revolution for international trade statistics. Our officials use the equivalent of ERA and batting average to drive trade policy debates (For those not into baseball, those were common, but we now know lousy, measurements of how good a player is). Case in point as Allison Schrager pointed out last week, the China – U.S. trade deficit is really much less than the officially stated $375 billion. Schrager cites the classic example of the iPhone to prove her point. The entire $900 of an iPhone is counted to the trade deficit with China. But, Schrager notes that more than a third of the iPhone’s components are made outside of China in other Asian countries. The real trade deficit with China is similarly probably a third less than advertised. But today is not tomorrow. China is becoming more innovative, creating more technology itself and doing more value added work each year (see the chart below). The biggest challenge with China is not the trade deficit itself but China’s continued protection of domestic markets. Among the reasons Chinese companies dominate in their domestic market is because China continues mercantilist policies. On the other hand, much of the U.S.’s success in innovation is due to immigrants, including and especially those from China. According to Bloomberg, “there are more Chinese engineers working on artificial intelligence at U.S. tech companies than in all of China.”* So America’s trade deficit with China is smaller than official statistics, but the current American animus to immigrants could mean in the future the official trade deficit matches reality. Post-modern politics is constructed with steel ironies and iron fallacies.

*Does that mean America’s intelligence is artificial? No! We’re a nation of immigrants

Bright Lights, Big City, Government Fiat

As you know, as of 2007, more people live in urban areas than rural ones. That trend continues with cities continuing to grow rapidly. So what were the fastest growing cities between 2000 and 2016? According to the Visual Capitalist, in India, “the fastest growing cities are in the south, where there are at least 10 large cities that have roughly doubled in size.” In South America, Bogota, Colombia has grown the fastest. In Africa, Lagos, Nigeria has doubled to nearly 14 million people. And then there’s China. Lots of cities in China’s coastal regions have doubled in size during that time period. Xiamen, where a few years ago we drank too much baiju with the deputy mayor, has tripled in size. Experts predict more and more mega cities emerging over the next 50 years. Are there any technological and cultural events that will reverse that trend? How about government fiat? China is purposefully trying to cap the populations of two of their largest cities, Beijing and Shanghai, according to the Financial Times. And, in fact, Beijing’s population shrank slightly last year. Whether they are successful in that new policy will help determine just how accurate the prediction of larger and larger cities is.

 

Obviously given this newsletter’s content, we have an interest in international. We are indeed keenly interested in our world. How could one not be in this rotating, orbiting globe chock full of so many interesting characters, events and mysteries? And as you’ve probably noticed, we are also a fan of both music and New Orleans (much of the former would not be possible without the latter). So when an effort comes along that combines all three, you know we’re all in. Playing for Changerecords musicians “performing in their natural environments and combines their talents and cultural power in innovative videos they call Songs Around The World.” What the organization is trying to change we have no idea but we do enjoy their music video collaborations. Their most recent song, Everlasting Arms, features Dr. John, Luke Winslow-King and Washboard Chaz, all from New Orleans. But also playing on the song are musicians from Argentina, Italy, Anguilla and that most exotic of all places, Mississippi. As we discuss the world this week, the song seems an appropriate accompaniment to China’s ideological prism. It harmonizes well with data on women and business and it certainly adds a back beat to surprising news about pesticides and suicide. It’s this week’s International Need to Know, singing about all the important news of our world, even as we wish our name was as cool as “Washboard Chaz.”

Everlasting Arms featuring Dr. John | Playing…
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Without further ado, here’s what you need to know.

China’s Ideological Prism

Now that China has officially altered their constitution to eliminate term limits for presidents, perhaps it’s an apt time to consider the trajectory of politics in China. Fortunately a new academic paper, China’s Ideological Spectrum, provides some insights on this issue. Written by researchers at Stanford and the University of California, the paper studied ideology in China through a large scale online survey.” In fact, nearly half a million respondents filled in the survey between 2012 and 2014. The paper reports the results show “Those who prefer authoritarian rule are more likely to support nationalism, state intervention in the economy, and traditional social values; those who prefer democratic institutions and values are more likely to support market reforms but less likely to be nationalistic and less likely to support traditional social values.” Interestingly and perhaps not surprisingly, there is a big difference in ideological perspectives between the young and the old in China. “In terms of age, the survey shows that conservative and antimarket/traditional preferences increase with age for those ages 35 and over.” Will this young generation, even as they age, want more reforms? Will they get them? China’s rulers must navigate tricky ideological waters in the coming years, which we observe after reading that in Beijing this week during the Communist Party Congress, the government is restricting the number of foreigners allowed in university area bars and pubs. Drinks over security, we say.

Keeping Company of Women

We’re a week late celebrating International Women’s Day but we’re often late for holidays so why should this one be any different?  For the holiday and otherwise we point to the latest data on which region’s companies have the most women managers and CEOs. East Asia and the Pacific lead the way with 33 percent of their companies having women CEOs or the highest-level manager. The Middle East and North Africa take up the rear. Interestingly, according to the World Bank data, Thailand and Cambodia are the only two countries where the data show more women running companies than men. In a related data point, start-up companies in Africa do better than the global average for having women founders with 30 percent of such companies founded by women. And yet also related, we point you to an OECD study showing that women “around the world spend two to ten times more time on unpaid work than men,” i.e. taking care of children, elderly relatives, cleaning, cooking and other such activities. Mexico tops the list with women working more than six hours each day on average on unpaid activities. In no country do men work more on unpaid activities than women, but in Sweden women spend the least amount of time on such work. We now go vacuum our Ikea furniture.

     

Pesticides and Suicide

A friend of ours recently wrote an oral history of M*A*S*H for The Hollywood Reporter. You may remember the theme song for the movie and TV show is called “Suicide is Painless,” which we were reminded of when reading about the great strides Sri Lanka has made in curbing suicide rates. Suicides increased dramatically in that country in the 1960s. In the 1980s, a pesticide registrar, Michael Eddleston, noticed the correlation between increased suicide rates and the large-scale introduction of pesticides in the 1960s.”The suicide rate increased from five per 100,000 people to 24 per 100,000 people in 1976, and then peaked at 57 incidences for 100,000 people in 1995.”  When people who were prone to commit suicide had at the ready a handy poison, more people successfully killed themselves. So Eddleston began working with Sri Lanka to ban the most poisonous of pesticides. Consequently, suicide mortality rates plummeted: “from 57 instances to a 100,000 population in ’95, it has dropped now to 17.” This is a 70 percent decrease accomplished not by improved mental health programs but by eliminating the easiest tool for suicide in that country. According to the article,”Research suggests most people who try to kill themselves with pesticides reflect on the decision for less than 30 minutes, and that less than 10% of those who don’t die the first time around will try again.” The tools used to commit suicide vary greatly by country. In Hong Kong, where there are lots of tall buildings, jumping to one’s death is prevalent. No surprise that in the United States, guns play a large role in suicides. Gun control, alas, is not painless.

We apologize for not delivering key international information and data to your digital doorstep last week. Our knee, which was recently replaced, was in need of additional medical procedures, as pain and stiffness broke through established term limits like a Chinese president. Combine that with our brother’s wedding (congrats Joe and Linda!), and we found ourselves unable to make our usual weekly delivery. But we are still more reliable than the person who delivers, or rather doesn’t deliver, our daily local newspaper. It is a rare morning when the paper is at our house on time and too often it is not delivered at all. We have often reported these delivery mishaps but nothing seems to change. You are probably asking yourself why we still take the physical paper. We can offer no particular good reason other than old habits die hard and we like to read the physical paper while we eat our morning Cheerios (we are receiving no payments from General Mills for that statement though would gladly accept their sponsorship since we are even more addicted to Cheerios than we are to the physical newspaper). We figure our habit will forcibly end sometime in the next ten years when the delivery of physical newspapers will go the way of VCRs, cassette tapes and DJ Khaled (okay, this last is aspirational–please, please make this annoying man go away). While our newspaper delivery person starts looking for other positions where she doesn’t do her job, we spill the beans on Chinese fertility, solve the case of the missing salaried worker and determine where expats should live. It’s this week’s International Need to Know…

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

China Fertility

We admit to being a bit obsessed with demographics. Although almost all events and phenomena have a complicated set of causes, we think demographics is often not given a large enough slice of the explanatory pie (delicious when served with rationalization ice cream). So we read with interest a Bloomberg article detailing the continued fall in China’s fertility rate. After a brief spike following the relaxation of the one-child policy in 2015, the number of births in China fell 3.5 percent last year. That trend is likely to continue and China’s working age population—currently 902 million—will continue to decrease. In fact, China’s working age population has been decreasing since 2012. That means China’s GDP will stop increasing at such a high rate (remember GDP increases only through larger working age populations and increases in productivity), whether official statistics reveal this or not. And, as the Bloomberg article points out, China’s aging demographics could lead to a slow down in innovation. “Not only will there be fewer young people, who tend to have a higher appetite for risk than their elders, but they’ll be a minority in the work world.” Analysts will examine President Xi’s policies, U.S. trade policy and a host of other factors, as they should, but we wonder if China’s demographics will be more important than any of these other factors to the long-term trajectory of its economy.

The Case of the Missing Indian Salaried Worker

We are more dubious than some regarding the rise of the relative importance of large companies. Nonetheless, we do believe they should be a healthy part of the mix and in economies where rules, regulations and culture make life too difficult for the formation and growth of formal companies, people suffer. The India business publication LiveMint points out this is a problem for India where among developing countries, salaried employment, i.e., those working for companies rather than self-employed, is very low. In fact, India salaried employment is below 20 percent as you see in the graph below. At the other end, China has the highest percentage of salaried jobs, followed by South Africa, Malaysia and Brazil, all countries which have climbed up to the World Bank’s “middle income” category from “low middle income,” where India continues to reside. Many of the other countries with low levels of salaried employment are also struggling to achieve the middle income category. Self-starters are great, but companies are necessary for a successful economy.

Where Expats Should Live

It’s common nowadays to hear people threaten to leave their country if one political outcome or another occurs. But where should they move? The ability to make money is certainly one factor. So in what cities do expats command the greatest salary? HSBC Expat provides the answer as reported by Bloomberg, and surprisingly, to us at least, it is Mumbai. Foreigners living in the Indian mega city earned on average $217,165, “more than double the global expat average of $99,903.” Why do expat jobs command such a high salary there? According to Dan Blackburn, head of HSBC Expat, the answer is high employment and experience levels and because a large percentage of the jobs are in engineering. We’re not sure we’re satisfied with that answer. The top four cities after Mumbai, as you see in the list below, are all high cost cities. In fact, other than Jakarta, all the cities near the top of the list have high costs of living. While we puzzle this out we suggest you request a transfer to Mumbai on the double.

For reasons we won’t go into here, we’ve been researching the TV show, This is Us, which led us down a tangential rabbit hole researching the song, Blues Run the Game, which led to reading up on Jackson C Frank, who wrote the song, and who has the seventh saddest Wikipedia write-up ever. If you are ever despairing of your life, whatever you have to mourn—and we all have something—just remember yours is unlikely to be as dire, tragic or painful as Frank’s. Born in Buffalo, NY (tragic enough in itself, Ron Armitage), at age 11 a fire broke out at his school killing 15 students, including Franks’s then girlfriend, Marlene, who he later wrote a song about. Frank himself suffered burns on 50 percent of his body. Frank recorded his only album as a young man while living in England. The album was not a popular success and things went from bad to worse for Frank personally. Frank lost a son to cystic fibrosis and later  suffered severe mental health issues that led to his being institutionalized and later to becoming homeless. Years later one of his fans found him and hoped to help him to begin recording again. But before this happened, Frank, sitting on a park bench in Queens, NY, was shot through the eye by a pellet gun a kid was shooting indiscriminately in the neighborhood. Eventually Frank died of pneumonia and cardiac arrest at the age of 56 in 1999, unknown, broke and alone. His music did not save him but continues to stir millions, including viewers of This is Us. It is of no solace to Frank, of course, but even the most tragic life can have hopeful impact. We hope to move you about Europe’s lost generation, sing the blues about unicorns, and provide a sequel to self-driving slippers. It’s this week’s International Need to Know, attempting to be the Jack of international news and data.

Blues Run The Game–Jackson C. Frank (From Vi…
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Without further ado, here’s what you need to know.

A Lost Generation?

We noted a number of months ago that Europe’s economy has been recovering after a long, dark economic night resulting from the financial crisis. But for Europe’s youth, no dawn looms. At the height of the great recession, in some EU countries the unemployment rate for youth hovered around 50 percent. For the EU as a whole, a quarter of young people were unemployed. That is no longer the case but even today, nearly a fifth of young people in Europe are unemployed. As you see in the chart below, the difference between youth unemployment and employment for older people is stark. Young Europeans are starting from behind with little hope of ever catching up to previous generations. Like the lost generation of World War I, this will have long and worrisome impacts. As the IMF writes, “after long spells of unemployment and with limited experience, the young are less likely to find work. If they do find it, it will likely be at lower wages. Wages not earned and savings not put aside can be extremely difficult, if not impossible, to recover later in a person’s career” Old policy makers have run the youths’ blues long enough and need to make rescuing the lost generation a higher priority.

Are all Unicorns the Same Color?

I hate the term, “unicorns,” especially as it’s now being adapted to NBA players. But, even in its traditional finance definition (a privately held start-up company with a valuation of $1 billion* or more) it grates on our senses. So I somehow type this post while covering my ears with my hands. But we were intrigued, when researching which countries are home to the most unicorn companies, by how two countries utterly dominate. Three-quarters of all unicorns graze in only two countries, China and the U.S. Remarkably, in 2017, as Ian Bremmer recently pointed out, only four unicorns came out of Europe and those were all in the UK. But in 2017 the U.S. saw 32 leap up and China witnessed 18. China is just behind the U.S. in total unicorns, not just ones born in 2017, as you see in the chart below. India is a distant third. Chile is the only South American country with a unicorn. There are lots of forests in our world but only a few are producing these creatures.

*We question how many of China’s unicorns are truly “privately”  held.

 last week’s story on self-driving slippers.  After starting this week with a rumination on tragedy and two not entirely uplifting stories, we are grateful to eagle-eyed reader, Dave Billings, for pointing out this video of Nissan’s self-driving chairs he stumbled across inspired by the self-driving slippers. The technology. The music. It is clearly destined to be one of our favorite videos of the year although we are a bit worried should Tesla start applying self-driving technology to inanimate objects. We do not trust Elon Musk. And when chairs become intelligent, all bets are off.  Nonetheless, though blues do indeed run the game, they cannot make anyone entirely sad when they know self-driving chairs exist in the world. See you next week with happier international news.

【TECH for LIFE】INTELLIGENT PARKING CHAIR | In…
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