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Last week we were optimistic. This week less so. The U.S. federal government continues to be a disaster abetting a natural one. But Trump has set the bar so low that we are giving state, regional and local officials too much leeway. Not being Trump is not good enough. Most despairing of all, we see no efforts to develop a South Korea or Taiwan-like response–of testing cases, tracing the infected and then quarantining them. This would allow us to start to end shelter in place policies and begin to re-open the economy. Can we get at least one governor or mayor of a major city to take the approach below at their next press conference?

UNKNOWN GOVERNOR OR MAYOR OF MAJOR CITY

Here is our current data. As of this morning, we have x number of people tested and confirmed to have Covid-19. Y number of people have been confirmed to have died as a result of Covid-19. Yesterday we had Z number of new cases of Covid-19. We tested W number of people.

We need to be able to test N number of people per day. Our current capability is H. To get to get to N we are taking the following actions. (list these actions–this is a difficult supply chain challenge but it is doable)

Once we get to N number of tests per day, we can start “testing and tracing” as they have been doing in South Korea. To be able to effectively trace, we are taking the following steps to secure tracers, equipment, create a database, determine how to isolate cases, and ensure they are able to isolate, etc.

Once we are able to test and trace we will be able to start opening up businesses. At current rates of building up testing and tracing capabilities, we will be able to begin opening up businesses on ___ date. By taking the steps described above, we hope to do testing and tracing sooner than that.

We will update you regularly on our progress on this.

Thank you for coming to our press conference.

Taiwan’s success and techniques, which we wrote about on March 12, continue to be ignored. Nearly every chart of the pandemic you see online does not include Taiwan (thanks to Roy Ngerng for the one above that does). This is because WHO bans Taiwan and because countries are scared of China. There’s a mid-term solution to the pandemic and Taiwan offers one of the answers. 

Without further ado (and lately we have much more ado than usual), here’s what you need to know.

Like It Or Not, We’re All In This Together

One of the many reasons why China and the U.S. sniping at each other during this pandemic is dangerous is that we all need each other. This is certainly true health wise—a virus by nature is transnational—but also economically. As China gleefully trumpets that there are many more cases of Covid-19 outside of China than in, and that things are slowly returning to normal there, they forget that to get their economy back on its feet, they need the markets of the world. And those markets have now collapsed because of the pandemic. For China’s economy, it’s nearly as damaging what is happening in New York, Paris and New Delhi as what is happening in Shanghai, Xiamen and Shenzhen. According to Caixin, “Output contracted in March more than February, work weeks shrank further and hiring declined despite labor shortages…return to work has not meant return to growth for China.” In addition there have been reports that local governments are forcing companies to cook the books to make production look better than it is. The truth is they don’t have enough customers for which to produce. After all, 40 percent of China’s economy is still tied to its exports. And gleeful American policymakers back in February who chortled about the problems in Wuhan might have wanted to stop and think what that was doing to our economies both then and when the virus inevitably traveled to our country. We’re all in this together. At some point we need to start acting like it.

A Note About Supply Chains

All the pieces matter noted the great TV show The Wire. That’s even more true for supply chains, which as we noted a while back, are likely to change radically due to the pandemic. Countries will not be putting all their virus vaccine eggs in one basket anymore. But decisions we are making in one area are affecting supply chains in ways people don’t often understand. For example, understandably air travel has been severely restricted and airlines have smartly responded by cancelling routes—in other words restricting supply. There is talk of the United State closing down domestic air travel. Again, there might be good reasons to do this to slow down the spread of the virus. But we also need to think through how to mitigate the impact on the supply chain. When you are flying to Chicago for a business meeting or to Florida for vacation, below you in the belly of the plane is lots of air cargo, not just your checked bag. Someone we know at an air logistics company tells us, “Capacity is already outrageously reduced but is getting worse by the hour with more airlines cancelling lanes, even on freighter services. Prices are skyrocketing to a level we have never seen before! The only thing moving now is food and any medical supplies requiring the quickest transit time so the ocean freight industry will continue suffering as well.” All the pieces matter. Never forget that.

Put Brazilian Gangsters in Charge of White House?

A number of years ago, when interviewing small businesses for a project I was a part of, I heard consistently how hard it is to do business in Brazil. The bureaucracy and corruption made it difficult for these companies to be successful there. That same combination, along with a Trumpian-like president, is bringing Brazil to the brink of Covid-19 disaster. Brazil’s President Jair Bolsonaro who earlier this week called the virus “a little flu” has berated his subordinates for suggesting Brazilians stay at home and businesses close, much less prepare to do test and trace. It’s become so bad that the gangsters of Brazil have taken matters into their own, presumably gun-toting, hands. On Tuesday night, according to Andrew Cesare, Rio’s gangs enforced a lockdown that started at 8 pm that night. The statement the gangs issued read, “If the government won’t do the right thing, organised crime will.” We advocate for better organized crime inside the White House.

When last we left you, we were about to fly to Japan for vacation and work. We cancelled our trip if not at the last minute, than certainly at the last hours. We cancelled not so much because we feared there was a greater chance to contract the conornavirus in Japan, but because just before we left, Japan essentially closed everything down. There would have been nothing for us to do over there but sit in our hotel room. In fact, as we were cancelling, we told the INTN spouse that likely by the end of our vacation it would be more dangerous here than there. Of course, by here we meant the U.S. not the Seattle area specifically which within days of our cancelling our Japan trip became the American epicenter of the Covid-19 epidemic. But our home town is one of the most internationally tied in the country so it should not be surprising that SARS-CoV2 has gripped its infectious tentacles here.One of the more amusing, astonishing, depressing behaviors we see from a minority of people is that they are not at risk from the virus so they will continue on in their lives doing what they want when they want. We presume they have parents or grandparents. Maybe they hate them or are expecting a big inheritance they want sooner than later. Or maybe they are just idiots. Whatever the answer, we raise the fog of corona, point to which country we all could learn from and warn about consequences of quarantining. It’s a special coronavirus edition of International Need to Know, coughing ahem at bad pandemic takes wherever we find them.

Since we wrote the above, Seattle has cancelled all events of 250 or more people, the U.S. has banned all flights from Europe,Tom Hanks(!) has been diagnosed with corona, people are using Tinder (!!) to communicate with people in Wuhan about the epidemic, and the NBA postponed a game just before tip-off when moments earlier one of the players tested positive for coronavirus. The world has officially entered the Tyson Zone when events are so insane there’s literally nothing that could happen that would shock or surprise us at this point. On a more serious point, the President of the United States started his speech Wednesday night by insulting Europe, EU countries refused Italy’s desperate pleas for medical equipment and China has threatened to cut off medical supplies to the U.S. if it doesn’t back off against Huawei. The world is quickly reverting to a pre-World War I order–that is, there is no cooperation at all, it’s every country for itself. This ultimately is a bigger concern than the virus. Unless the U.S., EU, China and the rest of the world start working together, using whatever is left of the liberalized post cold war order Trump and Xi are destroying, 50 years of amazing progress in improving human lives will go down the drain. Definitely worry about the Covid-19 virus pandemic and take all necessary precautions, but don’t take your eye off the ball–a rotating orb hurtling through space.

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

The Fog of Corona

Inevitably in an age of instantaneous communications, people are making broad assumptions and assertions about SARS-CoV2 corona (screw it, corona is much easier to type). Regular readers of INTN will remember we were early on the coronavirus beat, bringing it to our readers’ attention on January 9^th. By early February, in both work interactions with logistics and manufacturing companies, and in our reading of a variety of Chinese experts, it became clear to us this is the most impactful economic event since the 2008 financial crisis. In fact, it is likely to change supply chains more than any event since September 11^th with consequences that are difficult to entirely understand. Today that is becoming a common place belief. Meanwhile, people rightly condemning China’s inept actions at the beginning of the outbreak in Wuhan, when officials were more concerned about controlling information than the virus, are now praising China as a model for how to deal with the virus. In fact, too many analysts are making the jump to asserting authoritarian governments are a better way of governing. This is childish thinking. During such a crisis, or course there needs to be intrusive state interventions. Even in robust democracies the laws are written to provide powers to governments not granted during ordinary times, thus Washington’s government banning gatherings of 250 or more people. Praise for authoritarianism is making the rounds partly because China’s government is selling the line that the world needs to learn from their successfull taming of the epidemic. As a part of this propaganda campaign, China is promoting the idea that the virus did not start in China, and may have originally started in the U.S. There are many things the world does not understand about the virus itself and the most effective public policy reactions to it. In fact, we are willing to wager that much of what we think we know will turn out to be wrong in the light of longitudinal studies and time. But unless we think we are in a permanent state of pandemic, then we do know the answer to which system is better: authoritarianism or liberal democracy.

PS There has been some heroic work by medical workers in China. They should be lauded, whatever worries we have about the government there

Look to the Other China on how to deal with Corona

There has been much concern expressed about governments responses to the coronavirus. That is true here in Seattle about the U.S. federal government, but it was especially true of the people of Wuhan about their local, provincial and federal government. (check out this video of their citizens shouting “shame, shame” at a CCP official). But some countries have so far been more successful than others in containing the virus. South Korea, of course. But the “other China”, Taiwan, also stands out. So far, despite being only 81 miles off the coast of mainland China, having 850,000 citizens who live in China and another 404,000 who work there, Taiwan currently has only 30 confirmed cases of Covid-19. Back in 2003, Taiwan was hit hard by SARS—but they learned from it. They set up a National Health Command Center in 2004 “that focuses on large-outbreak response and acts as the operational command point for direct communications among central, regional, and local authorities.” With Covid-19 they have established a checklist of 124 actions, including “border control from the air and sea, case identification (using new data and technology), quarantine of suspicious cases, proactive case finding, resource allocation (assessing and managing capacity), reassurance and education of the public while fighting misinformation, negotiation with other countries and regions, formulation of policies toward schools and childcare, and relief to businesses.” Other countries have much to learn from Taiwan. Here’s an excellent primer on how they have reacted to this pandemic.

Surge in Domestic Violence in China Due to Corona

As American officials consider whether to strengthen social distancing policies, it would be wise to at the same time strengthen domestic violence infrastructure. Because one of the many trade-offs of mandatory quarantining that we’re learning from the China experience is that domestic violence will increase when people are holed up in their homes for weeks at a time. A recent article in the invaluable Sixth Tone notes that “While millions of people are spending time indoors, rights activists say there have been increasing instances of domestic violence — a crime in China since a landmark anti-domestic violence law went into effect in March 2016.” The virus, it turns out, is as damaging on the psyche as the lungs, or at least public policy response to it can be. “Wan Fei, a retired police officer who is now the founder of an anti-domestic violence nonprofit in Jingzhou, a city in the central Hubei province, told Sixth Tone that reports of domestic violence have nearly doubled since cities were put under lock down.” This is not to say a lock down of a city is inappropriate (in fact we think we need to go further than we have–“wash your hands and avoid people” for the time being), but mitigating measures on a whole host of issues—economic, social and criminal—must also happen. Good times 2020.

Up ahead a family wheeled their ladder on the specialy constructed platform that they then flipped over for their children to sit in. Bam and Nikka, who we just met, took us under their hospitable New Orleans’ wings and showed us how to plead for the best throws from the Mardi Gras floats parading by. Notwithstanding stereotypes, this has nothing to do with baring one’s chest. Mardi Gras is really a family affair, full of kids, costumes and the coming together of the most unique and special city in the world. The parades that first carnival weekend featured bands, floats, dancers, and entertainment of any category you can think of. Mardi Gras betrays the stereotype of easy-going, lazy New Orleanians. Sure they may not fix their potholes, create the latest gee-whiz technology or work insanely long hours, but to put on the equivalent of a dozen torchlight parades in a single weekend, with complicated floats and “throws” that are mini works of art tossed to the deserving crowd, along with the beads, takes a year-long dedication to the cause that no other city’s culture possesses. Nikka spent the last month working on her sign sculpted with lights to attract the most coveted throws, including purses and shoes. The Mande Milkshakers–women of every size, age and race–had obviously practiced their moves over and over to get such fun loving precision, as had the high school band with their high steppers and drummers banging the beat with the seriousness of Moses on the Mount. Even the 610 Stompers (“Ordinary Men, Extraordinary Moves”) had obviously spent many an hour perfecting those dances. New Orleans is as relaxed as anywhere you’d want to go but you gotta work hard to have fun. And they do, and we work hard to bring you corona hand washing worries in Africa, which languages have the most speakers and India’s spiraling economy. It’s this week’s International Need to Know, blowing international information and data like Trombone Shorty at Shorty Gras.

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

African Handwashing

There is a face mask shortage in Asia due to the Corona Virus (we refuse to mar the small Arizona company, Covid, with WHO’s made-up moniker—the beer company can handle it) but not a soap shortage despite the fact medical professionals tell us the most important thing we can do to avoid Corona, or any virus, is to wash our hands diligently. But what if you don’t have the ability to wash your hands? This is unfortunately the case for too many people in Sub-Saharan Africa. According to the World Bank, “In 42 countries, less than half of the population have basic handwashing facilities with soap and water in their homes. The countries with low access are concentrated in Sub-Saharan Africa.” Access to handwashing facilities is part of the U.N.’s Sustainable Development Goals for a reason. There is much concern about Corona spreading to Africa because of its lack of health care infrastructure. But lack of basic handwashing facilities should also be a big concern.

Languages Most Spoken

Let’s pull up a stool and make a bar bet (maybe at Napoleon House in NOLA,  for a Pimm’s Cup): which language has the most speakers in the world? If you said Mandarin, you owe me a drink. But don’t feel bad, that’s what I would have guessed too until I read Visual Capitalist’s graphic of the “100 Most Spoken Languages Around the World. (original source: Word Tips)” But there’s a catch. There are 1.132 billion English speakers around the world, more than the 1.116 billion Mandarin speakers, but only 379 million of those English-speaking people are native speakers (including certain Bostonians). But because English is now the Lingua Franca of the world, English is the second-language for a heckuva lotta people. If we’re just counting native speakers, than Mandarin is indeed the most spoken language in the world with Spanish second and English third. The full list is below, only in English.  What will this list look like in 2120 (should there still be spoken languages–by then everything may be communicated in emojis)?

India’s Economic Troubles

India, one of the most important countries in the world, has been going in the wrong direction politically recently–you have probably seen the news about Modi’s citizenship law. But economically things are going south too. Good chance the two are related. India’s economy is in a rather severe slowdown as a paper at Harvard’s Center for International Development documents. GDP is growing at a much slower pace but the paper says the underlying data is even worse: “The growth of consumer goods production has virtually ground to a halt; production of investment goods is falling. Indicators of exports, imports, and government revenues are all close to negative territory.” What is causing the economic slowdown? Harvard’s paper suggests it is a complicated balance sheet recession coming at the end of a credit boom. We don’t know if credit petering out in India is a problem, but if it is then there’s a lot of credit relying countries in the world that may be in for a rude awakening soon. Good times.

On Sunday afternoon at the gym as I looked up from the bike to the bank of televisions above, all but one was talking about the death of Kobe Bryant, his daughter and the seven other unlucky souls (one TV incessantly played Law and Order reruns*). It did not matter whether the channel was on ESPN, CNN, MSNBC, or even Fox News, everyone was fixated on Kobe. Perhaps that was to be expected but what was interesting was they were all covering the story in the same way—a tragedy, obviously, but all with reverence for Kobe Bryant and respect for his many basketball accomplishments. As a lifelong Seattle Supersonic fan, I almost always rooted against Kobe on the court and was occasionally troubled by his off court behavior such as the credible allegations of rape against him in 2003. But in death, Kobe appears to have done what no one else has—temporarily united the country, as usually when I look at the gym’s TVs they are all covering completely different worlds–Fox, MSNBC and CNN were identical.** Plus, in listening and reading about Kobe in recent days it appears he learned and grew from his past transgressions and acted in some ways to atone for them,*** including in his stellar support of women’s basketball. And so we find ourselves finally, belatedly cheering for him, a man who continued to learn and improve, which is better than most of us do. And we root for China to behave better in possible epidemics, boo corruption around the world and take a timeout to compare China and America’s trade with the world. It’s this week’s International Need to Know, taking last minute clutch shots on international information and data.*At this point we suspect the Law and Order universe is part of Scientology or some other cult, what else could explain its ubiquitousness?

***Though perhaps the woman in Colorado may understandably not be satisfied

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

Love in the Time of Corona

The woman we were meeting with, after shaking our hand, began coughing and sneezing, and now we hope our flu shot really worked. But while it is true, as health authorities remind us, that currently the regular old flu is currently killing far more people, the corona virus we warned readers about way back on January 9th is nothing to, uh, sneeze at. That’s partly because China’s honesty with information is a bit like the woman we met with—we’d prefer they’d been more upfront about the problem before shaking the world’s hands.  In the initial stages of the emergence of the virus, China was more interested in controlling the spread of information than the spread of the virus. For nearly a month after it was clear there was a new virus and that it could be transmitted person-to-person, China worked to prevent such information getting to its own citizens (though it appears on January 8 they did inform WHO). Probably due to pressure from China, WHO did not initially assess the risk as “high” but rather as only “moderate.” They continue to prevent Taiwan’s participation with WHO. This is a good illustration of the challenge we discuss in our upcoming book of China’s interest in transforming the international world order into one with Chinese characteristics. Now the heavy government pendulum of China has swung towards ruthlessly controlling movements of people to abate the spread of the virus. Perhaps this is the right course of action, and certainly it is an open question of how prepared the U.S. is for such a disease outbreak, but China’s infusing global organizations the world relies on with their authoritarian culture, is a trend the world needs to recognize and address.

The Good, The Bad and The Corrupt

Last week while you were buying the last N95 mask left on the shelf and switching channels from the impeachment hearings, Transparency International released their 2019 report on corruption around the world. Their index rates countries on their perceived level of public sector corruption on a scale of 0 to 100 with 100 being squeaky clean and 0 as corrupt as a White House impeachment lawyer. Europe was the least corrupt region according to their rankings and Sub-Saharan African the most corrupt. 22 countries have improved their scores since 2012 and 21 countries have gotten worse, including Canada and the United States. The three countries which improved the most are Greece, Guyana and Estonia. Scan the top and bottom ten below for the cleanest and dirtiest countries.

China Vs. U.S. Trade With World

In our forthcoming book about how China has changed and how the U.S. and world should address this, we note the extraordinary success of China’s economy, and how important it is to the world economy. Visual Capitalist illustrates this with a graphic showing how the U.S. was the main trading partner to the world in 1980 and today China is. They note that “…before 2000, the U.S. was at the helm of global trade, as over 80% of countries traded with the U.S. more than they did with China. By 2018, that number had dropped sharply to just 30%, as China swiftly took top position in 128 of 190 countries.”  Trade is also a much larger component of world GDP today at 59 percent compared to 1980 when it accounted for only 20 percent of GDP. When grappling with concerns about the authoritarian nature of China and its interest in infusing the previous international rule-of-law order into one with Chinese characteristics, any strategy must understand China’s economic power and influence.

One of the more troubling aspects of our times is the fetish against the free press, including too often by the current U.S. President. So we are only offering constructive criticism not attacking the media when we write that Reuters owes its readers an explanation for its Wednesday, January 8 (Seattle Times) article reporting that a “Canadian security source” asserted the Ukraine airliner was not shot down by a missile but instead was a matter of technical issues. Reuters reporter, David Ljunggren, claimed this source thought “there was some evidence one of the plane’s engines had overheated.” Shortly, thereafter, Reuters followed up with another article stating, “Five security sources—three Americans, one European and one Canadian—told Reuters the initial assessment of Western intelligence agencies was that the plane had suffered a technical malfunction and had not been brought down by a missile.” We understand initial information is often wrong but anyone with half a brain knew from the beginning that mechanical problems were not the cause of the crash. Even our quarter size, non-aerospace, non-Iran expert brain knew this article was BS that very night (our “security sources,” i.e. our spouse, can confirm this). So the question is who were these “intelligence” and “security” sources? Were they really in a position to know? Were they feeding Reuters false information on purpose? Did Reuters stop to think how illogical the assertion was that the plane exploded and then crashed due to mechanical failure? Reuters owes its readers a forensics accounting of how they got this article so wrong. Their reporting was rebroadcast throughout the night and even the next morning by everyone from NPR to other distinguished publications with potentially troubling ramifications for Boeing and others. As Tom Cruise yelled in A Few Good Men, we want answers…and in this case we can handle the truth. And we present the truth to you today on world GDP growth since 1950, an update on a still underrated country and the continued success of Vietnam. It’s this week’s International Need to Know, the first quarter Houston Texans, the second quarter Kansas City Chiefs of international news and data.

We would be remiss if we did not note the passing of another New Orleans music icon last week—5th Ward Weebie. A rapper, and major foundation of the New Orleans Bounce scene (a form of hip hop, where twerking originated). He is featured in Trombone Shorty’s Buckjump. RIP. (Mailchimp is having troubles loading videos so we can only link to Buckjump)

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

2020 is Better Than 1950

In our upcoming speech on globalization and inequality, one of the points we make is the world is much better today than it was 70 years ago. Inequality is a challenge but as we work to fix that problem we shouldn’t destroy what helped the world succeed the last 70 years. To that point, Our World in Data graphically shows this in the chart below (click on the chart to enlarge and see each country better). What it shows is that the average person in the world today is now 4.4 times richer than they were in 1950. Almost every country in the world is wealthier today than in 1950 with nine countries now 15 times wealthier than they were 70 years ago. Unfortunately, nine countries are poorer today than they were in 1950. Any guesses who they are? But shifting back to the winners, Taiwan, which recently re-elected their President, had an income of $1400 in 1950. Today, Taiwanese are among the richest in the world. We will have more to say about Taiwan in our upcoming book about China and the U.S. Stay tuned!

Somewhat Underrated Country Update

Since Prime Minister Abiy Ahmed won the Nobel Prize, I suppose we can’t call Ethiopia the most underrated country in the world, but it is still somewhat underrated. For example, did you know Ethiopia had the second highest rate of GDP growth last year? Yep, Ethiopia grew at 10.6 percent in 2019, just behind Nauru* and continued a 13 year run of high rates of economic growth. But it is not all rosy news. Ethiopia’s inflation rate reached 19 percent in 2019, much higher than previous years. Its unemployment rate has also increased significantly in recent years, and its exports have slowed. These headwinds are why the World Bank is predicting Ethiopia will only grow at 6.3 percent in 2020. We shall see. In the meantime, the reformist minded Abiy is still planning on elections for this May and June. This coming year could be a pivotal one for our underrated country.

*Who knew there was a country called Nauru? Did C.S. Lewis make this up? Talk about underrated. 

Vietnam’s Continued Rise

We head back to Vietnam in a month and a half, and as always, are looking forward to it. No country has gained more from the U.S. – China trade war than Vietnam. In fact, as you see in the chart below, no country received more manufacturing foreign investment than Vietnam since 2014. On our trip to Vietnam last year we saw some of this investment up close, including a shoe factory that moved there from China in 2015. GDP in Vietnam grew at 7 percent in 2019 and the country is likely to see strong growth this year too. Our biggest fear for Vietnam is Trump will discover it and start imposing tariffs on goods coming from there. For anyone who cares about trying to reform China, this would be one of the most short-sighted policies possible. Which is why we worry it will happen. In the meantime, Vietnam’s strong economy is also illustrated by the number of foreign retailers interested in entering the market or expanding their presence there. Japanese and Korean retailers such as Uniqlo and Lotte both have big plans there. That’s another data point, perhaps even more significant than GDP, of Vietnam’s success. It remains one of the four most important countries in the world, as we explain in our upcoming book.