Archive for month: May, 2019

One of the Four Most Important Countries, Ms. Nguyen is Evidence, and the Trade Philosopher

When we first traveled to Vietnam nearly two decades ago, the roads were filled with bicycles and scooters. Over the years we began to see more scooters and fewer bikes. This week during our trip to Ho Chi Minh City, cars entered the great race to middle class status. Back in the day, crossing a street in Vietnam was akin to walking across hot coals, always scary, often painful, and deadly if you took a wrong step. But while it is not exactly safe nowadays to cross the street in HCMC, it is certainly safer than it used to be. Lanes seem to exist and drivers occasionally even use them. And there are often–praise be the Great Urban Planner in the Sky–crosswalks and stoplights! Crazy town. There are drawbacks to all of this, of course. The increased number of cars are adding to our world’s climate change problems. But nonetheless, there is something gratifying and hopeful to periodically visiting a country and seeing its economic progress. In a few years, we hope those cars will be powered by electricity, and the electricity generated cleanly not by coal as is currently the case. So this week we bring you three tales of our trip to Vietnam, including why it is one of the four most important countries in the world, tangible evidence the world is better than it was, and the importance of the international trade philosopher. It’s this week’s International Need to Know, offering dragon fruit and Vietnamese fresh rolls to all who will have them.

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

One of the Four Most Important Countries

The notion slipped across our gaze, at first merely a bud, than blooming into a Da Lat Rose during our trip to Ho Chi Minh City last week. Vietnam is one of the four most important countries in the world. Until recently the world had grown comfortable (complacent?) in the model of an emerging country growing economically then liberalizing politically. Taiwan and South Korea, for example, each helped to set that pattern. Many of us assumed it was the new way of the world, like prestige TV or exotic flavors of ice cream. And then came China. Or rather it did not come–to liberalize. Instead, even as China’s economy grew, in recent years it has become more authoritarian. It broke the trend of economic liberalization followed by democratization. Some worry this is the new vogue of the world. That future emerging markets will remain authoritarian. And so we turn to Vietnam, and note its up and coming economy. Will it follow the post-World War II pattern and liberalize as it develops economically or follow China’s precedent and rule ever more authoritatively? How the world will look and operate in the future may hinge on the answer.

We are fond of reminding you that more people have climbed out of poverty the last 40 years than at any other time in human history. Ms. Nguyen* could be a poster child for this wonderful trend. Thirty years ago she sold fruit from a small cart on the streets of Ho Chi Minh City. Last week we met in her gorgeous home full of expensive wood carvings across the street from the main wholesale produce market for the region. One of her sons is off to study at Cambridge this fall, the other studied in Boston. She is now a major importer of fruits and vegetables, including Washington state apples, for the increasingly large Vietnamese middle class. We get that our world faces major challenges and we understand that things are not perfect, but for those who threw out the post-World War II order, and for those railing at market economies, they do so at our own peril. When the angry among us rage against that fading market-produced light, please think of Ms. Nguyen, and the hundreds of millions like her.

*Not her real name

The Trade Philospher

Since we have not asked his permission to write about him, we will not use his real name, but Mr. Linh is an archetype of a certain international trader ex-pat we have come upon over the years in our travels and work. Such a person starts out from nothing, travels to another country, founds a business and a home there by working hard and smart. Add in some good luck with that industrious intelligence and these ex-pat traders establish a good life for themselves. Our man in Vietnam, originally from Singapore, is one such example. Over much of a day meeting with, dining with and sharing a beer with Mr. Linh, we certainly learned about a segment of the Vietnamese market (the reason for our meeting), but we also learned much about Asia, politics, how people act and react and many other useful concepts and ideas. Mr. Linh is not an educated man but he is well-read, and experienced. He can delve into history and relate it to his adopted country’s situation and how the world works in general. He is a true trade philosopher. I would swap many a professional policy wonk for such a man.

The New World Progresses, Where the Wealth is, and Venezuelans Destinations

We raise a new and troubling trend that we need your help to understand. We talk, of course, about waiters’ insistent desire to take our plate away before we are finished eating. This happened again to us last night. Interestingly, we were at a private club not a restaurant. We once assumed restaurants do this in an effort to turn tables more quickly and bring in more revenue. But we’re not sure what the incentive is for a private club to do this. At any rate, it has been happening more and more frequently over the last year. Food will still be on our plate, we may be engaged in conversation with our meal mates, and the waiter, often without even asking, will whisk our dish away. So why are restaurants and even private clubs doing this? Is there a plate shortage we are unaware of, perhaps a result of one of the many trade wars the United States has engaged in? Perhaps it’s just a corporate fad, making no sense, like the open office craze that swept work places for a few years. Or maybe there is something more deep and mysterious occurring, some X-Files scenario. Or perhaps it is foreign interference into American dining morés or even some secret society of wait staff engaged in a revolt against the eating masses? Whatever the cause, we aim to get to the bottom of it and stop this madness. While we await your theories, we offer a dish of the new world, an entrée of where the world’s wealth is and an unappetizing dessert of the Venezuelan diaspora. It’s this week’s International Need to Know, your maître d’ to a world of information and data.

We will be speaking in Spokane next week to the Washington Public Ports Association and then off to Vietnam for a week. INTN will return on Thursday, May 30th.

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

The New World Progresses

With the abdication of leadership in the world by the U.S., the rest of the world adapts and adjusts accordingly like the Golden State Warriors without Kevin Durant. This week brings word of Japan and Vietnam forming new alliances to address China’s South China Sea ambitions. The Japan Times reports that last week Japan and Vietnam’s Defense Ministers met in Hanoi and announced the two countries “will work together to peacefully resolve the issue of China’s rapid expansion in the South China Sea.” The two countries more generally are deepening their alliance to address a host of security and policy issues. The two countries signed a Memorandum of Understanding to cooperate on “maritime security, humanitarian assistance, disaster relief and cybersecurity.” We are interested in whether our new world will be safer and more peaceful than the old one. But either way, it is happening.

Where the Wealth is (Our Underrated Country)

Over the last ten years, where is wealth congregating? Or as VisualCapitalist phrases it, where are the best and worst performing wealth markets in the world, defining “wealth market” as “the total assets owned by individuals within a jurisdiction.” You will not be surprised that China tops the list but the number three country for wealth markets over the last ten years is, yes, our favorite underrated country, Ethiopia, which saw a 102 percent increase since 2008 in the size of its “wealth market.” Number 2 Mauritius is probably surprising too. India is a no-brainer for this list as is Vietnam (where we are headed in a week). The worst performing market is not surprising either—nice work Venezuela.

Venezuelan’s Destination

Speaking of Venezuela, that slow burning trash fire has led to a diaspora. Where are Venezuelans fleeing to? Check out the Council on Foreign Relations handy map below. With 1.1 million, Colombia is home to the largest group of fleeing Venezuelans, followed by Peru, the United States and Ecuador. Simon Kuestenmacher tells us that about 10 percent of Venezuela’s population has fled the country in the last three years. Venezuela was once a prosperous, stable country. We hope it will be again someday.

Chinese Helping Africa, Tokyo’s Housing Affordability, Baby Driver

Truth and facts are much debated in public discourse today with various parties claiming ownership over them. We are a data person by nature–Lou Dobbs once called us an empirical bast**d in front of a crowd of hundreds, a badge we wear proudly. But it is easy to become overconfident in data so that it can obscure the truth. Nearly all data is open to interpretation, incomplete or a smaller sample size than we realize. We see national writers such as Noah Smith or even entire basketball teams such as the Houston Rockets making this mistake on occasion. Almost all theories and ideas succumb to what we call the Tyranny of Narrative. Art contributes to this but also can mitigate it. Not too long ago we said to someone that nonfiction books provide us with facts, but novels with the truth (we believe we were quoting or misquoting someone but can’t find the source). The person we were talking with looked at us like we were crazy. And maybe we are but we are nonetheless eager to see the new movie Bolden that is being released tomorrow (but not in backwater Seattle) about the near mythical New Orleans cornetist Buddy Bolden who some claim invented jazz. He did not. No one person invented anything–but The Tyranny of Narrative makes us think so. However, Bolden was probably a key evolver of music that eventually became known as jazz. And for the truth, if not the facts, we look forward to seeing the movie. And we look forward to presenting you one of the most enlightening books we’ve read in recent years, how Tokyo keeps housing affordable and the surprising reason for Japan’s low birth rate. It’s this week’s International Need to Know, blowing our horn about international data and information and trying to remember to not be too confident about it.

Bolden – Official Trailer

Watch the Video

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

Book it: Chinese Helping Africa

When discussing China’s activities in Africa, most of the attention focuses on large government influenced projects such as loans that can’t be paid back or China taking control of ports or other worrying activities. But the 2017 book The Next Factory of the World: How Chinese Investment is Reshaping Africa, focuses on the individual Chinese business people who are opening factories throughout Africa. For us it is the most enlightening book we have read since The Warmth of Other Suns. The author, Irene Yuan Sun, in the best way melds individual stories of Chinese investors and Africans she has interviewed with a broader macro data view to develop a current picture of Africa and a possible vision for its future. As she notes, these private Chinese investors are not part of the geopolitical games of the Chinese government, “They are instead driven by the economics of their individual businesses and the momentum of their own remarkable life trajectories. These are Chinese who rose from working in the early factories of China to developing their own in Africa.” Sun’s hope is just as Japan begat Taiwan which led to South Korea and China, that a variety of African countries are now poised to become the next manufacturing powerhouses with all the economic and social development that entails. Sun’s glasses are not rose-tinted. She explains the trade-offs, challenges and possible pitfalls of Chinese investment in Africa. But the book changed how I view the ascent of China and the prospects for Africa. The book notes there are now more than 10,000 Chinese firms active in Africa (mostly privately owned) each transforming the localities in which they’ve set up shop. From flip-flop factories in Nigeria, to ceramics manufacturing in Lesotho to drug capsules in Ethiopia (yes, our most underrated country plays a role in this narrative), Sun’s book, notes the “confluence of rising labor costs in China, the relocation of Chinese factory owners with valuable life experiences to Africa, and Africa’s demographics make it possible for us to imagine that Africa might very well become the next factory of the world.” Buy and read this book.

Tokyo’s Housing Affordability

As many cities wrestle with housing affordability issues, including here in Seattle, home of INTN’s worldwide headquarters, perhaps it is time for policymakers to meet Mr. Demand and Ms. Supply. They’re an ever shifting Virginia Wolfe type of couple that we all too often forget in our rush to economic Tinder and eHarmony. But Jim Gleeson of the London Housing Authority creates an instructive animation to remind us of their importance, as you can see in the two screengrabs below (click on them to see the full animation). In 1970, Tokyo, Paris, London and New York had similar housing supplies. By 2013, Tokyo nearly doubled its housing stock while the other three cities had barely increased theirs. Consequently, Tokyo housing prices have been relatively stable while in the other three cities, housing has become crazily expensive. Get building if you want less inequality and more affordability.

Baby Driver

More than once we’ve discussed Japan’s low birth rates and consequent aging demographics. But, we haven’t delved into why Japan has such low birth rates. Fortunately, college student Trevor Grayeb (the future is in good hands) has and shows that much of the reason for Japan’s low birth rate is due to the “low proportion of children born out of wedlock.” Yes, non-married Japanese are not having enough irresponsible sex. Okay, maybe that’s not his conclusion. But Grayeb shows that married Japanese actually have children at a higher rate than the OECD average. Japan’s aging demographics aren’t due to the establishment having fewer children—they actually do this better than the rest of the west—it’s due to those not married having fewer children.