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One semester at Willamette University–Harvard, Stanford and Yale alums feel foolish in the presence of Bearcats–we lived in the Canterbury Apartments. It was coincidentally the same semester we were taking Chaucer from one of our favorite professors, Kim Stafford. Kim had a way of pronouncing Middle English so that it was understandable. His voice was almost Jack Nicholson-like, as were the sharp bend of his eyebrows when reading one of Chaucer’s ribald tales. He made Chaucer as fun for us as it was for someone in 1455. When Stafford learned I lived in the Canterbury Apartments, he said we needed to hold class there while we read through the Canterbury Tales. I readily agreed and one afternoon the whole class squeezed into our apartment and drank Mead wine that Stafford brought (in today’s cuckoo, politically correct world a professor would probably be arrested for such transgressions but we figure the statute of limitations is up) and read through the MIller’s Prologue or some such tale. It was a great afternoon and a class full of learning and fun. So we learned with delight last week that Kim Stafford has just been named the Poet Laureate of Oregon. As we toast a glass of mead to Professor Stafford we speak in rhyme about  studying in China, keep a steady meter about what worries the world and make funny Chaucer-like puns about Chinese nicknames. It’s this week’s International Need to Know, making a pilgrimage through the Pardoners, Summoners, Reeves and Cooks who make our world so amusing, complicated and fascinating.

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

Coming to China

In our continuing effort to understand a world and future increasingly influenced by China, we educate ourselves on education. China now has more African students studying at its higher education institutions than any other country, including the former leader, France. The U.S., of course, has traditionally had more international students, whether from Africa or elsewhere, than any other country (the U.K. is second). That has helped project American culture and values into the world, as well as provided top international talent for the country. The U.S. still has the most international students though the numbers have flattened in the Trump era. China, not surprisingly for an emerging world power with grand ambitions, is hosting an increasing number of international students, from 291,000 in 2011 to nearly 500,000 today. China aims to increase that number even more for a variety of reasons, including growing future world leaders with ties to China. Says Wang Huiyao, director of an influential Chinese think tank, “There are more than 300 world leaders including presidents, prime ministers and ministers around the globe that graduated from US universities, but only a few foreign leaders that graduated from Chinese universities, so we still need to exercise effort to boost academic exchange and educate more political elites from other countries.” The coming decades will see a very different world under very different influences than today’s.

What Are You Worried About?

Are we on the right track or are we, as Dr. John rasped, in the right place at the wrong time? In a survey by IPSOS, which tracks views of people around the world monthly, only a few countries’ populations feel they are on the right track. China stands out as an outlier with 90 percent feeling things are headed in the right direction. Nearly 73 percent of Indians also have a good vibe of where things are heading. But almost all other countries are like Han Solo—they’ve got a bad feeling about this. In fact, only 40 percent of the world’s population thinks things are on the right track. The IPSOS survey also asks what are people’s top worries. This varies quite a bit from country to country. In Japan it’s inequality, in Turkey it’s terrorism and in Brazil it’s corruption. By the way, a PEW Global poll finds that nine of ten international scholars rate climate change as their top worry. That threat does not rate high among the average Joes, Wangs, Kims and Singhs of the world. Of course, this is why action confronting climate change proves elusive.

Pancake Emperor and Chinese Nicknames

We are a keen observer of the NBA playoffs which are pivoting to the Championship round as we write. Chinese are also great fans of the NBA (we were once stalked by hotel workers in Beijing bugging us for info after having lunch in the hotel restaurant with a former NBA player). So with delight we were pointed to a Deadspin article on the fantastic nicknames the Chinese have created for NBA players: “At their best, Chinese nicknames always seem to combine both affection and shade, producing monikers that both fans and haters can get behind.” Thus Charles Barkley is called a fat pig, but he’s a flying fat pig (飞猪)—high praise, since the character for “flying” normally is reserved for players who take their game above the rim.”  The article points out the visual nature of Chinese characters provides for clever puns and multiple meanings. For example, Lebron James, who travels a lot without being called for it, “is dubbed ‘Six-Step Bron’ (六步郎), using three characters that also sound like ‘LeBron.’ But our favorite is Stephen Curry, which unfortunately is not safe for work. You must click on the link for that glorious nickname and explanation when you get home tonight.

We traveled to Boston last week which distracted us from making our usual International Need to Know rounds. We arrived on Beantown’s first day of nice weather after a long, cold winter. As our Lyft drove us from the airport to our hotel, taking us by the innumerable universities in the city, it seemed that nearly every Bostonian was basking in the first warmth of the year. We gazed out the car window seeing people biking, throwing a Frisbee, going for a run, rowing on the St. Charles River, or just generally lazing around outdoors. This is our favorite time of year as the weather brightens, baseball takes bloom and the NBA playoffs provide bountiful entertainment. Bike riding beckons (as soon as our knee cooperates), as does the spicy smell of the barbecue. It has been a long winter across much of America, and there was something invigorating, almost primal, in the celebration of its end in Boston. Our tolerance for the cold, dark months has weakened as we have grown older. And thus our plan when we retire, alas many years from now, is to live in that great northern Caribbean town of New Orleans during the winter months. As we await the backbeat of the tuba, the taste of the etouffe and the warmth of distinctive culture, we take you on a tour of Russian military spending, Saudi Arabia’s continued dependence on oil and authoritarian gridlock.  It’s this week’s International Need to Know, Ooh Poo Pah Doo’ing all the amazing and important international events of our times.

James Andrews – “Ooh Poo Pah Doo” 7,945 views Without further ado, here’s what you need to know. Russia House Russia is in the news a lot and at least in Western news sources, the coverage is not particularly positive (in Russia, of course, the news glows…like Chernobyl). Under Putin, Russia reasserts itself globally, whether invading Crimea, meddling in Syria or interfering in elections in Europe and America. But perhaps surprisingly, according to the Stockholm International Peace Research Institute (SIPRI), Russian military spending last year decreased by 20 percent  in real terms (accounting for inflation). That’s the first decrease in military spending since Putin first began striding the world as Russian leader bare chested in 1998. Certainly Russia’s economy and federal budget has been constrained in recent years by lower oil prices. But oil has increased in price the last 12 months so maybe Russian military spending will increase this year? Apparently not since Putin is concentrating on raising Russian living standards. Says Bloomberg, “President Vladimir Putin has also called for higher living standards and higher spending on social infrastructure, such as healthcare and education. Some government officials have called for lower military spending to free up funds for such initiatives.” So Russia has fallen to fourth in military spending behind Saudi Arabia. Speaking of which….   Once in a Lifetime  Saudi Arabia is undeterred by lower oil prices as seen by its leapfrogging over Russia in military spending. What does this mean for Syria and other parts of the Middle East? Will Saudi Arabia play a larger role in world affairs and Russia a smaller one in the coming years?  A recent article points out that Saudi Arabia’s economy is still dependent on oil prices which they are actively trying to prop up. According to the Wall Street Journal, “the world’s biggest oil exporter will need crude prices to average almost $88 a barrel this year to balance its budget.” As we write, oil is currently $70 per barrel. We wrote two years ago that the long term price of oil will be low though there will be some mid-term upward fluctuations. The last year we have experienced that mid-term rise in price. Where will the oil price go within three years? Hint: we predict Saudi Arabia military spending will have to level off or decrease by then. Authoritarian Gridlock Much like music lovers and Kanye West, many have been questioning democracy in recent times. As we pointed out last year, democracy is not nearly as popular with millennials, who often see authoritarian rule as a viable alternative. And as the economist Tyler Cowen has pointed out, China’s three decade success has elevated the status of authoritarianism and diminished democracy’s. Many feel that authoritarian governments are more productive than gridlocked democracies. So we read with interest a recent paper that asserts authoritarian regimes suffer as much from legislative gridlock as democracies. The researchers studied China and found, “A unique data set from the Chinese case demonstrates that authoritarian regimes can have trouble passing laws and changing policies—48% of laws are not passed within the period specified in legislative plans, and about 12% of laws take more than 10 years to pass.” Perhaps freedom of speech and other democratic freedoms should be valued more than our post-modern world thinks.

Years ago we were traveling overseas, Asia perhaps, though we don’t remember exactly where. We were looking at some postcards, when such communication beasts still existed. We saw one with a naked large man sitting on an enormous turtle. We bought it with the idea of mailing it to two friends who worked in the White House for the First Lady, a sort of experiment on whether a postcard with a naked man sitting on a turtle would make it through the White House gates. It did. Our two friends, we were told later, were standing in their office, trying to decipher my handwriting on the postcard (I have the world’s worst handwriting–not third or fourth worst, but the actual worst in the world), and chuckling at my postcard when the First Lady walked in and asked what they were reading. They showed her, and she laughed. And if memory serves, commented on my horrible handwriting. We cannot claim many things in this world, but we can say that Barbara Bush laughed at our postcard. RIP Mrs. Bush while we show how globalization is more than trade, lament that everyone in Venezuela is poor and chart the rise of EVs. It’s this week’s International Need to Know, denying that we are Michael Cohen’s fourth client even as we undress all the secrets of our world.

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

Globalization is More than Trade

We noted two years ago that international trade no longer grows as fast as GDP around the world. That does not necessarily mean that globalization is slowing down. Case in point is that housing prices in cities around the world are increasingly synchronized, at least in the largest, most prominent ones. As the IMF puts it, “for home prices in London, check the Tokyo listings.” The IMF recently presented data that shows “In recent decades, house prices around the world have shown a growing tendency to move in the same direction at the same time.” The IMF’s explanation for this new phenomenon (one we’ve noticed anecdotally in our own town with more and more international buyers of houses here in Seattle) includes institutional investors active in major cities, wealthy individuals buying  houses around the world and coordinated economic growth. The IMF concludes, “All of this suggests that house prices are starting to behave more like the prices of financial assets, such as stocks and bonds, which are influenced by investors elsewhere in the world. In countries that are more open to global capital flows, prices of both homes and equities tend to be more synchronized with global markets.” This is not necessarily a bad thing, though one wonders if it is making life more difficult for those struggling to buy their first house. At any rate, globalization continues to envelop many things, including housing.

Everyone in Venezuela is Poor

It is easy to forget Venezuela in the midst of all the other tumult convulsing our world. But it’s worth reminding ourselves from time to time just how bad things have become there. Since 2014, a consortium of Venezuelan universities have conducted an annual survey of conditions on the ground in the country. This year’s, which came out a couple months ago, found that 9 out of 10 Venezuelans live in poverty. Nearly 60 percent live in extreme poverty.  In addition, the survey asked more than 6000 Venezuelans, “do you consider your family’s income enough to buy food to consume inside and outside the home?” The shocking answer is that 89.4 percent answered this question no. Buttressing this data is the fact that 64 percent of respondents reported losing an average of 22 pounds in the last year. And no, Venezuelan economic policies are not the answer to America’s obesity problem. Instead, Venezuela continues to offer stark warning lessons for other countries on how not to run a country.

China Driving EV

More cars are sold in China than in the U.S. nowadays, a consequence of China’s larger population and continued economic growth. So it shouldn’t be surprising that the country is also driving the sale of electric vehicles, especially since the government is pushing for EVs to alleviate the air pollution problem. Colin Mckerracher of Bloomberg quantified the EV market in a recent tweet storm (if only certain presidents used Twitter so productively).  The estimate is that 1.6 million EVs will be sold in 2018, and in China full-on electric car sales are pulling ahead of hybrids. McKerracher notes that “There are now 14 countries where EVs were above 1% of total vehicle sales. Still small, but most countries cross over 2% around a year after crossing 1%.” There are increasingly a diversity of EV cars to choose from as the second chart shows. This will likely also help increase sales of EVs, as people have more choice of what type of EV to buy. We expect the percentage of EVs on the road to increase exponentially as the technology matures.

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

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

We Simply Offer the Complexity Index

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

Deficits, Technology, Today, Tomorrow, 

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

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

Bright Lights, Big City, Government Fiat

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

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

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

China’s Ideological Prism

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

Keeping Company of Women

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

Pesticides and Suicide

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