This Time is Different
Years ago, when it was still a semi-respectable institution, I worked for a U.S. Representative who served on the Foreign Affairs Committee. At that time, Japan was the bogeyman of anti-trade policy wonks. One day I was talking with a very smart trade subcommittee staffer who asserted that Japan would take over the world. I didn’t buy that but I did say I could see China doing that someday. Jump ahead many years (too many to count) and Eric Sayers tweets a Center for Strategic and Budgetary Assessments (CSBA) slide that illustrates how China is a very different country from others the U.S. has tangled with over the decades. It is, of course, much more populous, but it also has a much larger economy. China’s economy is 60 percent as large as America’s. In 1989, at its relative economic peak, Japan’s was 39% of America’s. The Soviet Union was only about 40% of America’s at its peak. The CSBA chart below is a bit needlessly provocative comparing China to Nazi Germany, Imperial Japan and the Soviet Union but is interesting for comparison’s sake. China’s economy is slowing down and may even go into recession but unless their economy suffers a decade-long depression, China is a much more formidable geopolitical competitor than America has ever faced before.
India’s Changing Demographics
Yep, China is big, but so too is India. In fact, current trajectories would have India more populous than China in the next ten years. And its demographics are younger than China’s. But India’s demographic destiny is coming too. In fact, according to Ourworldindata, “The number of children in India peaked more than a decade ago and is now falling.” Right now, only India and Africa have growing working-age populations. By mid-century India’s workforce will also be shrinking. Of course, maybe the robots will have taken over by then. Or, the world will be adjusting to a very different set of economic circumstances due to very different demographics.
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admin2019-01-31 11:00:352019-02-06 04:49:10Parallel Worlds, This Time is Different in China, and India’s DemographicsAs a life-long Seattle Mariners fan, we greeted the announcement of Edgar Martinez’s long-overdue election to the Hall of Fame this week with unbridled Niehausean enthusiasm. We also viewed it as an illustration of the challenges with all human institutions. Edgar was demonstrably a more valuable player than Mariano Rivera, a New York Yankee who was also elected to the Hall this week. Edgar’s Wins Above Replacement (bWAR), a Sabermetrics measurement of a player’s total contribution to his team, is twenty percent higher than Rivera’s, just one statistical example of many we could provide. But, Edgar took ten years to make the Hall of Fame because he was considered a “specialist” since 70 percent of his career was spent as a designated hitter. Mariano Rivera, on the other hand, was elected in his first year (unanimously?!!!) of eligibility even though he too was a specialist, a closer, someone who only pitched one inning per game. This is only baseball (only baseball?!!!) but it is illustrative of a larger truth—humans are not very good at making judgments, of determining value, at devising institutions that don’t make mistakes. And yet when debating issues and policies, we are all very confident in our positions. Nonetheless, we confidently present news of underrated Ethiopia, good news on electricity and complicated news on China and coal. It’s this week’s International Need to Know, going to bat for important information and data.
Without further ado, here’s what you need to know.
Don’t Have to Act Like a Refugee
You may remember we’ve been plugging Ethiopia as the world’s most underrated country for both its strong economy and political reforms. This week comes news on the refugee front with Ethiopia passing a law “giving refugees the right to work and live outside of camps.” You see, Ethiopia, like many developing countries, is home to a large number of displaced people fleeing wars and other catastrophes, in this case from South Sudan, Sudan, Somalia and Eritrea. In fact, Ethiopia is home to the second-largest number of refugees in Africa, behind only Uganda. Many of these refugees have been in camps in Ethiopia for years and not allowed to work. Now they can, as VOA News reports, “the law allows refugees to move out of the camps, attend regular schools and to travel and work across the country. Refugees can formally register births, marriages and deaths, and will have access to financial services such as bank accounts.” BTW, most refugees are not in the U.S. or Europe, rather most are hosted by developing countries. So, Ethiopia with a GDP per capita of $706 is more committed to refugees than the EU ($32,233 GDP per capita and the U.S. ($57,638 per capita). It’s a mixed up, muddled world we live in.
I Have Seen the Light
Our age demands that we only talk about catastrophes and doomsday’s imminence. But there continues to be good news out there too, including the fact that for the first time less than 1 billion people are without electricity. Our WorldinData reports that “the total number without electricity fell below one billion for the first time in decades; very likely the first time in our history of electricity production.” In fact, currently over 87 percent of the world has electricity, the highest percentage ever, and much higher than in 1990 when only 71 percent of the world had electricity. Of course, the cynics will say this means we’re making climate change worse. Only someone with continuous access to electricity would ever say such a thing.
KEG vs. IEEFA, A Bad Rap Battle
Even though this may cause the Karma Electricity Gods (a great name for a band) to turn off our power, we note that the Institute for Energy Economics and Financial Analysis (a horrible name for a band) reports that “China is the lender of last resort for coal plants.” Yes, China has been making strides in renewable energy at home as we have reported on in the past but the IEEFA confirms that “China has committed or proposed about $36 billion in financing for 102 gigawatts of coal-fired capacity in 23 countries.” For those counting at home, “that represents more than a quarter of all coal-fired capacity under development outside of China. As you see in the map below, Bangladesh has the most proposed coal plants financed by China followed by Vietnam, South Africa, Pakistan and Indonesia. This will provide more electricity to populations that need it but with a cost to the environment. All decisions are colored gray with trade-offs—in this case also gray from pollution.
Life is not circular but perhaps it’s a Mobius strip. Take our relationship with Kareem Abdul-Jabbar, for example.* As a young child, we very much admired him, reading a children’s biography of him when he played for the Milwaukee Bucks. But then when he forced his way to the Los Angeles Lakers (Lebron did not start such shenanigans–and btw Kareem is too often given short shrift for GOAT status), our distaste for all things Los Angeles sports related impelled us to turn on him. His style of play and his ability to get away with offensvie fouls also drove us to distraction. But then in recent years as we read his incisive essays, watched his thoughtful interviews and generally admired his intellectual pursuits, we have again become a huge admirer. His most recent essay on the new controversial movie, The Green Book, informed us and gave us a new way to look at a variety of issues. And, now that he is writing for the reboot of one of our favorite TV shows, Veronica Mars, we will defend him to the death. We wonder how Kareem’s journey would have trekked had he not been 7′ 4″ tall with a unique ability to place a ball in a basket via a sky hook. We guess it would have been just as fruitful if perhaps not as much in the spotlight. And similarly we wonder about cloned vs. CRISPR horses in Argentina, Japan’s faulty economic data and China’s distressing economic data. It’s this week’s International Need to Know, looking for international data and information in all the right places.
*Ignoring the fact that Kareem doesn’t even know we are in a relationship, the cad.
Without further ado, here’s what you need to know.
Can the Clones Beat the CRISPRs?
As much as we think we may understand the world, nary a day goes by that we don’t learn something startling. For example, we were completely unaware that cloned horses compete in polo and that these Xeroxed horses are winning matches. According to a 2016 article in Science Magazine, “Last Saturday, at a prestigious match in the Buenos Aires neighborhood of Palermo, polo player Adolfo Cambiaso rode six different horses to help his team win…What is noteworthy is that all six horses were clones of the same mare—they’re named Cuartetera 01 through 06…”And according to Next Big Future, Kheiron Biotech, who cloned those horses, is using “CRISPR gene editing to create super horses.” The CRISPR-generated horses will be born later this year. The use of such advanced biotechnology is further along than is commonly realized (by me, at least) with all the benefits and challenges that presents. No comment from He Jiankui.
A horse of a different color…every horse is the same
Japan’s Falsified Economic Data
We’re accustomed to Chinese government economic data being unreliable but were unaware that Japan may have similar problems, at least when it comes to wage data. According to the Japan Times, the Japanese Ministry of Health, Labor and Welfare for the last 15 years has been publishing data that undercounted wage levels. This led to the government’s failure “to pay over ¥50 billion in benefits to nearly 20 million people.” According to the article, “Under existing rules, the ministry must review all business establishments in the country with 500 or more employees. But in Tokyo it had collected data from only a third of the roughly 1,400 such establishments, leading the data to show nationwide wages that were lower than they actually were.” This mistake, of course, has not gone over well, with Prime Minister Abe’s popularity taking a hit and 80% of Japanese saying they’ve lost trust in the government’s economic data. Lack of trust. It’s the theme of the two thousand teens.
China SOEs vs Private Sector
In our continuing “what is really happening in China’s economy” series, we offer a few data points. According to Andrew Browne at Bloomberg, “…while China’s per capita GDP, measured in terms of purchasing-power, is similar to Brazil’s, its consumption per capita is comparable only to Nigeria’s. If Chinese consumed like Brazilians, their spending would double.” Elsewhere it is pointed out that state owned enterprises receive 50 percent of all credit even though they only account for just 20 percent of GDP. Private companies (although even many of these are tied to the government in some way) also account for 80 percent of employment. But, the economy is slowing down as we pointed out last week. Another sign: China’s imports from Korea dropped 18 percent. China is going to try to bolster its economy. In fact, this week they are offering incentives to companies that limit layoffs. But we are curious to see if they concentrate their efforts on helping SOEs, and if so, how effective that is, both short and long term.
All good things come to an end. But so too bad things, and even things that are neither good nor bad. It is the way of our world, perhaps all worlds if string theory is correct. Most days here in the world headquarters of INTN we drive on something called the Viaduct, a double story highway traveling along Seattle’s waterfront, offering spectacular views of Elliott Bay and the Olympic Mountains. Tomorrow the viaduct closes forever to be replaced by a tunnel. There are good reasons to do so but it is also true that it ends the democratization of spectacular views in Seattle. While stuck in traffic we see Hyundais, Mercedes, semi’s, garbage trucks, old pickups and every other type of vehicle reflecting every demographic with every driver and passenger stealing at least a glance at the beauty. On the non-water side, one can peer into offices, apartments and parking garages, which if not as beautiful, are sometimes more intriguing. Progress is good but like Seattle’s weather all changes are colored gray, bringing both benefits and losses. And so too is life and the world as we examine China’s Tony Soprano mystery, Europe’s Christopher Moltisanti sadness and the surveillance of China’s Meadow and Anthony Soprano. It’s this week’s International Need to Know, riding down the open highway of international information and data with no tunnel vision.
Without further ado, here’s what you need to know.
The Tony Soprano Mystery of China
Like the continuing question of whether Tony Soprano died or not (the answer contained in this link), there are many mysteries in our world. But we find it strange that people continue to question whether China’s economy is slowing no matter the official GDP figure. It has and is. But I think what people are really asking is if the era of high GDP growth is over in China. The answer is also yes. GDP growth comes from increased productivity and/or an increase in the working age population. China’s working age population is at best flat and some experts believe it is actually falling. Caixin Global reports that a paper released by the Chinese Academy of Social Sciences (CASS) “said that China’s working age population, defined as the number of people aged between 16 and 64, declined by 1.6 million in 2013, marking the beginning of a serious structural change to the population: a shrinking workforce.” China’s official productivity statistics still show strong growth of just over 6 percent though this is lower from earlier in the decade. As the great urban migration slows and its economy matures, China’s productivity increases are likely to continue to slow. Oh, and if you examine China compared to other Asian tigers, the end of rapid GDP growth is right on time as the chart below shows. But for China extreme bulls, don’t stop believing.
The Christopher Moltisanti Sadness of Europe
With so much attention on China these days, it’s easy to forget the European Union, the Christopher Moltisanti of world economies. The EU’s economy, after a few years of relative stability, is also facing problems. Germany, the largest and in the past strongest part of Europe’s economy, is slipping into recession, experiencing its second straight quarter of negative GDP growth. France’s economy is not so tasty at the moment and its politics worse with Macron’s approval numbers below 25 percent. Meanwhile, Italy appears to be on the brink of recession with negative growth in the third quarter and continued high unemployment. Who would have guessed that in the midst of a Ross and Rachel like relationship with the EU, that the U.K.’s economy might be the strongest of the lot. Perhaps most worrisome is that the EU is being out innovated by, well, just about everyone. Korea now registers more patents than Germany. In fact, one U.S. company—IBM—registers more patents than all of Germany. And China is catching up to the EU quickly. It’s not surprising that populism has found such fertile European ground for its gnarly, knotted roots.
Meadow and Anthony Soprano are Being Watched
Two weeks ago we wrote about Chinese government policies that could retard future innovation. The Chinese government laughs at our concerns by using technology to more closely monitor its students. According to the Telegraph, “Schools in southern China are forcing children to wear uniforms embedded with computer chips that track their movement and trigger an alarm if they skip class.” The chips are sewn into the school jackets of the students. So take off the jackets you might suggest. Try again since “facial-recognition scanners at school gates match the chips with the correct student, meaning that any who try to swap jackets in order to bunk off will be caught.” Apparently the chips also somehow monitor if the students fall asleep. All in all, it’s just another brick in the wall.
As we entered 2019, we read about police called to a house where neighbors heard a baby screaming and a man yelling “Why Don’t You Die?” only for the police to find the arachnophobic man trying to kill a spider. And so we recalled our time battling a praying mantis. We had arrived back in Washington, D.C., where we then lived, after midnight, and let ourselves into the second floor apartment of the townhouse. We went to our bedroom to get some shut eye. But before we turned off the light we saw an extremely large praying mantis on the window sill making eyes at us. We slashed down at the large insect with a broom but only managed to knock it under the radiator. This would not stand. We needed proof of the beast’s death. So on our hands and knees we peered under the radiator but saw nothing. We looked from above down into the radiator. Still nothing. We tried hitting the radiator with our broom, hoping to flush it out. We strode the bedroom, broom in hand, searching for the treacherous mantodea. Until the phone rang. It was the tenant in the downstairs apartment, a formidable RICO lawyer for the Department of Justice, who fought organized crime. She wondered why we were making so much noise at one in the morning. We sensed this resilient esquire may not understand our epic battle with the praying mantis so we merely apologized and promised to keep quiet. We hung up, stared at the radiator, and slipped into our bed with one eye on a good night’s sleep and the other on the lookout. 2019 is sure to be full of many miscommunications but today we communicate clearly about China’s economy, big news in India and how we might utilize air pollution. It’s this week’s International Need to Know, welcoming a new year of international data, information and trends.
Without further ado, here’s what you need to know.
What is Going on with China’s Economy?
It is one of the four most important questions of 2019 (welcome new year, may your time on this planet be fruitful, fun and wise). Even as the Chinese economy continues to officially grow at 6.5 percent there is speculation that it is actually doing much worse. A variety of China watchers and economists opened up the hood of the apparently reliable China Volvo, examined its carburetor of underlying data and began to worry the engine block may be cracked. The China bear Christopher Balding points out in Bloomberg that consumption tax revenue has declined each of the last two months, 62 percent and 71 percent year over year. He also notes possible trouble coming down the pike, “With new loans outpacing new deposits by 13 percent in 2018, how the government recapitalizes a strained banking sector will be a major theme in the coming year.” Meanwhile, manufacturing is weakening with the manufacturing purchasing manager’s index (PMI), a gauge of factory work, dropping below 50, a sign of contraction. However, the non-manufacturing PMI rose to 53.8 so maybe this is all part of the long talked about transition from a manufacturing to service economy. Ah, but there are allegedly 69 million empty apartments in China. So, what’s happening in China? We don’t know but perhaps 2019 will reveal more than her retired cousin 2018.
Foxconn Begins Assembly in India
Speaking of China, although the trade war between China and the U.S. is not having large aggregate effects on the countries’ economies, we are seeing supply chains change which portend long-term effects to the world’s economy. One apparent such change are the reports that Foxconn, the large Taiwanese electronics manufacturing firm with huge assets in China, will start assembling iPhones for Apple in India later this year. [Ed note: this was written before Apple announced “subdued sales”–our correspondent may have more to say about that next week]. Apparently the new plant, which will be located in Tamil Nadu, will concentrate on high-end iPhone models. Whether these will be additional phones or Foxconn is moving some assembly from China is not clear. But if true, it’s another tangible sign of the world’s supply chain evolving in response to new geopolitical (and economic) realities.
World Air Pollution
Progress on the emission of climate changing pollutants has stagnated over the last year. And given the protestors in France, Americans voting down carbon taxes and other such recently expressed sentiments around the world, there does not seem to be much appetite for curbing the emissions. But perhaps if we frame the problem as air pollution there will be more progress. After all, air pollution is a visible and huge problem around the world. The World Health Organization reports, “nine out of ten people worldwide breathe polluted air.” Where is air pollution the worst? Yes, China has bad air pollution but it’s even worse in India, Pakistan and Egypt as you see in the map below. This air pollution has visible effects and, unlike climate change, impels people to complain and protest. Maybe the world uses this problem as the trojan horse to solve climate change emissions. We will all breathe easier if so.
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admin2019-01-03 11:00:282019-01-10 04:54:53What is Going on in China’s Economy, Foxconn in India and World PollutionThere is a house in New Orleans. More than one. Ott Howell, now an old man, stayed behind during the winds, rain and flood of Katrina to protect the house he has worked in for nearly three decades, the Beauregard-Keyes house, named after both the complicated confederate general and the now mostly forgotten best-selling female author. As he gave us a personal tour of the historic mansion, it was hard to believe that the kindly, gentle Ott, who professed a hatred for guns, was once a prison guard in the notorious Angola prison just outside of New Orleans. Al Jackson, a 72-year-old kindly man with lineage dating back to the early 20-century jazz greats, similarly gave us a personal tour of the Treme Petit Jazz Museum housed in the old Black Musicians Union Hall, a smallish home in the oldest African-American neighborhood in America. Al explained through photos, paintings and old tape cassettes how jazz sprung from the gumbo of African, Caribbean, German and French influences. He described the rampant racism such musicians experienced in pioneering an original American art form that like all things American, came from many lands. Well, there is a house in New Orleans. More than one. And they influence us to bring you news of the cultural distance between countries, China’s Achilles heel and a ranking of gender equity. It’s this week’s International Need to Know, a jambalaya of international data and information.
The Treme Petit Jazz Museum in New Orleans
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NINA SIMONE – The House of The Rising Sun (Best Version) Lyrics
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Without further ado, here’s what you need to know.
Our Cultural Distances
How important is culture to a country’s economic and political success? We have no idea but some researchers have attempted to quantify just how culturally similar countries are to each other. Or, as they ask, “Just how psychologically different are the nations of the world compared to each other and to the over-scrutinized United States?” They come up with some interesting answers. Countries in general are more culturally distant from China than they are from the United States. And Hong Kong is just as culturally close to the U.S. as it is to China (or distant, depending on your point of view). India has the most cultural diversity within its country, the United States the least (making New Orleans just that more special for its distinctness). Yemen is most culturally distant from China and the second most culturally distant country from the U.S, which I guess makes them pretty unique. Given the checkered history between the two, Vietnamese may be surprised to learn they are culturally closest to China. Although we are unqualified to vouch for their methodology, the study looks at a variety of cultural factors, including individualism, long-term orientation, value of hierarchy and others. We await a study of the culture of the researchers.
Is It Safe?
A former boss once told us that innovation is successful in places where it is okay to fail. So we’re very innovative. We have written that China does not get enough credit for being technologically innovative; case in point Chinese researchers apparently have succeeded in transforming copper into gold. But is the Chinese government now implementing policies that will put such innovation at risk? You’ve heard of the social credit system they have been instituting. They’ve now also begun instituting such a system for its scientists, according to an article in Nature (via Marginal Revolution). “Researchers in China who commit scientific misconduct could soon be prevented from getting a bank loan, running a company or applying for a public-service job. The government has announced an extensive punishment system that could have significant consequences for offenders — far beyond their academic careers.” As in the broader social credit system created in China, accused researchers will be banned from flying and getting on trains, along with losing grants and promotions. At the same time, on China’s popular Wechat app, censorship is on the rise at the same time as many Chinese receive their news via WeChat. But if you were wanting to read about the arrest of Huawei’s CFO, you were out of luck, according to the Vancouver Sun. Draconian consequences for failure and increased censorship could smother Chinese innovation in its high-tech, Internet of Things cradle.
Breaking News: Gender Inequity Still Exists
All over the world. But there have been some slight improvements over the last year according to the World Economic Forum’s 2018 Global Gender Gap Report while noting “there is still a 32 percent average gender gap that remains to be closed.” The annual report benchmarks 146 countries across four categories: economic opportunity, educational attainment, health factors and political empowerment. The largest gender disparity is in political empowerment. The smallest disparity is in education and health. Healthy, wealthy and wise? We’re doing okay on two out of three. Europe and North America lead the way on having the best gender equity with the Middle East bringing up the rear. Worrisomely, Africa has regressed in the last year. In terms of countries, Iceland is tops for gender equity while Yemen comes in last. Peruse the top and bottom tens below.
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admin2018-12-27 11:00:162019-01-10 04:51:51Our Cultural Distances, Is it Safe, and Gender InequityIn openings, we prefer whimsy, metaphors and analogies, punctuated with a bit of joy and a dash of amusement. In these weekly missives, we have often pointed out that we live in the most peaceful, prosperous time in all of human history. And this remains true. But today we open by directly stating we are entering an age perhaps as dangerous as any since the 1950s. This is both because of advances in technology and because of the new geopolitical age that has emerged. First, as technology has become more powerful and democratized, Moore’s Law of Mad Scientists looms ever larger: “The minimum IQ required to destroy the world drops by one point every 18 months.” Our forthcoming novel premised on this law also grows ever closer to completion. Second, the combination of a more powerful China and a U.S. in leadership retreat raises another flag of danger. China’s ascension and America’s relative descent were inevitable, given the Economic Center of Gravity has shifted east into China. But the transition from one great power to another is almost always rife with danger. So though we usually try to write about what’s not at the top of the news, today we begin with what was the most important news of last week–the much covered arrest of Huawei’s CFO, then dive into what should have been a big story last week–the first commercialization of self-driving cars, and end with some surprising news in Tehran. But because even in the most direst of times, there is always joy, whimsy and amusement to be found, and because we will again be in New Orleans next week (INTN will return on Dec 27) for Reveillon dinners, Professor Longhair tributes and Creole Christmas tours, we offer first this trailer for a movie on New Orleans dancing. It’s this week’s International Need to Know, buckjumping to the world’s complicated beat.
BUCKJUMPING | Trailer
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Without further ado, here’s what you need to know.
Arrested Development
The arrest of Huawei’s CFO Meng Wanzhou in Vancouver, Canada, just up the road from INTN’s worldwide headquarters, apparently at the behest of the U.S. government, was indeed the world’s most important news story last week. Why so important? It marks a new front in the increasingly frigid war between China and the United States (and other western nations). It occurs as China’s economy is slowing with lots of rumors the government will inject large stimulus to keep the economy humming and as deflation is clawing into its economy. The assumption has always been that China’s ruling government must have high economic growth to justify its continued existence. But, as we wrote a while back, the election of Donald Trump has accelerated China’s political prominence in the world. The Center of Economic Gravity shifting east meant regardless that China will play a much larger role in the world going forward. But the U.S., by pulling away from leadership in the world, accelerated that process. All well and good except that for all of the U.S.’s faults, and they are many–as in any institution involving that very imperfect species known as humans–America is not an authoritarian government with no sense of rule of law.* China is. Indeed, China has censored reports on the arrest of Ms. Meng. It continues to “re-educate” millions of Uighers. Rather than the current rule-based world order in which it is relatively easy to do business, China promotes a more opaque one that is based on its ascending interests, not on rule of law. Already China has detained a former Canadian diplomat and two other Canadians in retaliation for Ms. Meng’s arrest. What comes next, the reactions of the various parties and reactions to the reactions, will help set up the next 20 years of geopolitical transition.
*The current U.S. president is not an argument that the U.S. no longer has rule of law. Although he has complete disregard for the law and other conventions, the American system of checks and balances is, well, checking him and balancing him. That is a very different scenario from the system in China.
Self-Driving Cars are Here
As we noted, the two most important news stories last week were the arrest of the Huawei CFO in Canada and Waymo’s launching of commercialized self-driving taxi service in Phoenix. The latter received almost no press coverage for reasons that elude us. But that a company is now charging for self-driving car service (even if there is still a safety driver in the car) is a revolutionary step for technology, the economy and humankind. But our beat is international so we are here to show you where autonomous vehicle pilot programs are taking place in the world. The U.S. is first to be sure but there are also pilot programs in the UK, Australia, Switzerland, Netherlands, France, China and, of course, Singapore. However, the U.S. Congress this week is rebelling against legislation that would help ease the entry of autonomous vehicle technology in the market. So our bet is still on Singapore, with perhaps China right behind. Either way, we are entering a new world with autonomous vehicles now commercialized. Buckle your seat-belts, autonomously driven or not.
Tehran is Sinking
Tehran is literally sinking and not in the figurative way people often use the word “literally” as if they meant sinking under sanctions or government repression. No, according to an article in Nature, Tehran, the capital of Iran is “falling by as much as 25 centimetres a year, and that the collapse is spreading to encompass the city’s international airport.” This rate of metropolitan falling is among the highest in the world and is due to the “depletion of groundwater aquifers, which are being sucked dry to irrigate nearby farmland and serve greater Tehran’s 13 million or so residents.” That sinking feeling Iranians have is the damage to infrastructure they are witnessing and the fact that this is an apparently irreversible problem because the ground beneath the city has lost its porosity—water can’t fill into that ground anymore. This is likely to lead to more flash flooding and other problems in the city. Environmentally, the ground is sinking beneath our feet.
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admin2018-12-13 11:00:062019-01-10 04:47:55Arrested Development, Self-Driving Cars Are Here, and Tehran Is SinkingLast weekend we attended a benefit concert for Seattle Children’s Hospital at which three very diverse bands played. The Head and the Heart, a local Seattle band, were the headliners–a folkish trio, full of earnest melodies and lyrics. The second band of the night was New Orleans’ Preservation Hall Jazz band, who blew the house down with the rollicking, grooving northern Caribbean sounds that infuse the crescent city. The trombone player astonished with his sound, exuberance and the fact that he is somehow overweight despite his being in constant motion throughout the show (we imagine he must lie down on a comfortable couch the other 22.5 hours of the day). The opener was Kyle Craft, a young sapling singer-songwriter out of Portland, Oregon who somehow synthesizes glam and southern rock. So the three bands were diverse in types of music, age, race and in many other ways. The audience? Not as much. We feel there is a larger point to be made here about the current state of America, its political and other divides, but while we reach for it, we examine the glam of rich Indians, earnestly apologize for placing Singapore above Rwanda and riff on the jazz of Chinese-English misinterpretations. It’s this week’s International Need to Know, crafting and preserving important international matters while using both our head and heart.
Kyle Craft – “Exile Rag” (Recorded Live for World Cafe)
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Without further ado, here’s what you need to know.
The Increasing Number of Rich Indians
As the world watches China and the U.S. stomp around each other in a drunken global scavenger hunt, India continues to make stealthy progress.Take rich people for instance. India is growing them much faster than the rest of the Asia Pacific. Quartz India reports that, “In 2017, the number of high net worth individuals (HNWIs) in India grew 20% year-on-year, higher than in any other country, to 278,000.” The average growth rate of HNWIs (defined as people who have at least $1 million in investment worthy assets) in other Asia Pacific countries is in the 10 percent range. The increasing number of wealthy Indians is driven by a fast growing economy–India’s GDP more than doubled in the last decade. Coupled with strong GDP growth, however, India also is experiencing growing inequality—it is the 12th most unequal country in the world when measuring its gini coefficient (a crude measure of inequality). Of course, when you compare the overall number of HNWIs rather than the increase of them, India lags far behind Japan and China (see second chart below). Nonetheless, India is growing fast. Don’t tell Trump or Xi.
Never Mind Singapore, Rwanda!
So last week we were touting Singapore as ahead of the curve in preparing for drone deliveries. It took less than a week for us to sit corrected at our keyboard because it turns out Rwanda of all places is ahead in the drone delivery deployment game. This is due to the Silicon Valley based company Zipline partnering with the Rwandan government on delivering medical supplies. Says Zipline in an article on techmoran.com, “We now deliver over 35% of Rwanda’s national blood supply outside the capital city of Kigali, and we are saving lives everyday.” Zipline’s drones have a 160 km range and can carry 1.5 kilos (3.3 pounds for you non-metric heathens) of cargo. According to the article, “Health workers place delivery orders by text message and receive their package within 30 minutes on average.” Zipline so far has contracts in Rwanda and Tanzania and is about to enter the Nigerian market. Africa was an early adopter of cellular technology because of its lack of landline infrastructure, leapfrogging over developed countries in this technology. Perhaps the same will hold true for drone technology. Sorry Singapore.
Zipline drones airdrop medical supplies to African villages
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I Refuse to Translate That
During the dinner in Buenos Aires last weekend with the Trump and Xi camps, many people noted the only two women in the room were the two interpreters. Some wags also noted the two most important people in the room were women. Indeed, we have been in meetings where interpreters selectively translated the participants’ words, perhaps for good reason. So, maybe you were thinking translating apps could alleviate that problem. Apparently not if you are using the Chinese translating app, iFlytek. According to cnet.com, a software engineer tweeted that the app “censors politically-sensitive phrases.” Says cnet.com, “when she tried to translate certain phrases such as “Taiwan independence,” “Tienanmen square” and “Tienanmen square massacre” from English to Chinese, the system failed to churn out results for sensitive terms or names.” Cnet tested this and did not find the software as censorious as the software engineer did, but noted it would stifle certain sensitive terms. Interestingly, the app would translate Winnie the Pooh from English to Chinese. Maybe China really is opening up due to pressure by Trump. Or maybe Winnie the Pooh is more powerful than we realize.
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
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
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.
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