Archive for category: Uncategorized

New Orleans continues to be the greatest city in the world (and we’ve seen lots of world cities to compare it to) even though like most cities today the finely manicured claws of gentrification are rooting out some of the creative messiness that makes it great. Nearly every one of our Uber, Lyft and taxi drivers–many of whom are musicians, Mardi Gras Indians and other creative types–told us they now live outside the city (more evidence for our theory that suburbs are going to be more interesting than urban cores). But not even gentrification can completely destroy the glorious soul of the Crescent City. Only in New Orleans would we be able to enjoy an extraordinary concert experience on a random Tuesday night in November. After basking in the sounds of a young brass band busking on the street (the future is in good hands), we walked by a club and heard a band laying down a groove so deep and heavy George Clinton beamed happily on the Mothership. So we popped into the Blue Nile, not even paying a cover charge, and listened to Water Seed tear the house down. Until recently, the band members were Katrina refugees living in Atlanta, now they have returned triumphantly to New Orleans. As we advise you to check Water Seed out, we get down on the rise of the robots, boogie to brexiting the UK and try not to go into a funk about sexual violence data. It’s this week’s International Need to Know, the second line of international news and data. (Note: we’ll be making our world famous stuffing next week for Thanksgiving, back on November 30th)

(Never more proud to be a math major: Video gets good at 1:00)

Water Seed performing Arithmetic @ World Cafe…
1 likes	35 views

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

Rise of the Robots

On our flight back from New Orleans we read a sobering article that claims in 40 years robots will take over all jobs. This led us to read with interest the 2017 Industrial Robots report from the International Federation of Robotics. It turns out that last year robotic sales reached a new peak with a 16% increase to nearly 300,000 units. The automotive industry continues to be the largest consumer of robotics followed by the electronics sector. Interestingly, the beverage industry is also seeing a large increase in the use of robotics. Unsurprisingly, given its role in final assembly, Asia is by far the largest purchaser of robots, with nearly four times more than either Europe or the Americas. And, of course, China accounted for nearly a third of all robot sales last year. The top five purchasers of robots are China, Korea, Japan, the U.S. and Germany. Mexico, starting from a relatively low base, is rapidly increasing its use of robots, which should be no surprise given its increased prominence in the automotive manufacturing industry (we need to re-negotiate NAFTA because all our jobs are going to Mexican robots, or, uh, something like that). According to the report, around the world there are now “74 industrial robots installed per 10,000 employees in the manufacturing industry.” South Korea has by far the highest concentration of robots with 631 industrial robots per 10,000 employees. We are a long way from robots doing all work but the report does note that one robotic trend is “smarter” robots, often connected to the cloud–as they become smarter, robots will indeed be able to do more of our jobs. But we must ask: when robots take over will a robot be the executive director of the International Federation of Robots?

Brexiting the U.K.

So what is happening to the UK as it continues to take a long, slow walk off a Brexit cliff? The economy has not cratered but there are many worrying signs as are evident from an economic survey by the Organization of Economic Cooperation and Development (OECD). The UK’s economy is growing but at a much lower rate than the EU’s or other developed economies, per the first chart below.  More ominous, labor productivity has stalled, as you see in the second chart. Net migration to the UK is falling which is apparently what Brexit boosters want but we always believe that people not wanting to come to your country is a bad sign of economic and political health. London, which by a large majority voted against Brexit, continues to spend on infrastructure, much of it from UK funds. But, as you see in the chart below, the parts of the UK which voted for Brexit, received more funds from the EU. And the British education system does not seem to be helping much with the UK doing poorly compared to the OECD average in a number of categories, including the number of students exiting school early. There are reasons for the discontent in much of the British population that led to the Brexit vote. Unfortunately, it is unclear how Brexit fixes those problems. In fact, it exacerbates them. 

Help the Toos

Given recent high profile news, it seems a good time to highlight the chart below detailing reported cases of violence against women around the world. Such data is, of course, incomplete, given that not all countries reported data to the United Nations (only 128 countries reported) and even in countries that did report, there may be underreporting. But of the countries that did report to the UN, Sweden, the UK, Botswana and Australia “had the highest reported rates of sexual violence.” The United States is especially high in rape. In addition to the basic human rights issues, gender inequality is a drag on economic growth. A McKinsey report calculated that improving gender equality would add $12 trillion to the global economy (see 2nd chart below). Me too is both a social and economic matter.

We are a big NBA fan despite losing our Seattle Sonics basketball team to Oklahoma City. So before headed to dinner with friends we were happily watching the opening game of the season between the Cleveland Cavaliers and the Boston Celtics and unfortunately saw live the gruesome injury suffered by Celtic forward Gordon Hayward. Having dislocated our kneecap while playing basketball in college, perhaps our capacity for watching such injuries is less than others–we literally fled the room after the injury. The next morning while scanning the news we came across the photo below. Don’t worry, it does not show the injury but it does show the horrified reaction of fans sitting behind the basket, one holding his hands up to his mouth, another grimacing, another covering her eyes. And then there’s one guy holding up his smartphone smiling somewhat evilly and either taking a photo or video of Hayward. Who is this man? Why is he so happy about this horrible injury? Why does he feel the need to record the moment? At the same time he smiles and records, a man, presumably from the team’s medical staff, is running up to help Hayward. This photo seems to sum up humanity in all its glory, flaws and depravity. Meanwhile we record more edifying happenings, including the state of the digital world, China’s 19th Party Congress and flying bikes (!) in Dubai. It’s this week’s International Need to Know where not even driving rain and power outages  in Seattle prevent us from delivering international news and data to illuminate our world. (But not next week when we’ll be on the road at a conference–we’ll be back on November 1)

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

Who is Exporting Connections?

Approximately 50 percent of you are reading this on your mobile devices according to our data analytics (apologies to you for the difficult formatting on mobile–we hope to improve that soon). We have a number of readers in Japan and it’s no wonder since according to the Organization for Economic Cooperation and Development’s (OECD) recently released Digital Economic Outlook 2017 report, Japan is number one in mobile broadband digital subscriptions (see table below). Finland, Australia, the U.S. and Estonia are among a number of countries well above the OECD average with Greece, Hungary and Colombia bringing up the rear. Surprisingly, high tech start-up nation Israel is below the OECD average. Pivoting from users to producers, Korea is tops for highest share of employment devoted to IT, followed by Estonia, Luxembourg and Finland. Estonia is famous for its digital prowess even as its Baltic neighbors lag far behind–policy matters more than geography. The report also examines the largest exporters of ICT services. Ireland is tops, followed by India, the Netherlands and the U.S. Interestingly your broadband speeds, subscriptions and penetrations are not always correlated with the size of your industry and exports.

China at the 19th Party Congress

Earlier this week, at the opening of China’s 19th Party Congress, President Xi Jinping gave a three and a half hour speech promising “a new era,” one in which we hope speeches will be shorter. For those trying to understand China’s political structure in the wake of the Party Congress, below you will find a handy infographic (click on it to make it larger and readable) produced by M.Taylor Fravel of MIT. China’s economy has been relatively robust leading up to the Congress. It appears that some of the growth was bolstered by large deficit spending as can be seen in the second chart below. Current government stimulus is higher than even during the height of the financial crisis in 2009 as Kyle Bass of Hayman Capital Management reports. Not coincidentally, Natixis reports on the required money that will need to be spent to support China’s “zombie state owned enterprises” (those unable to pay their interest expense with their revenues). China has been deferring dealing with some of their economic challenges in the interest of having a strong economy leading into the Congress. As this week’s meetings end, what will China’s approach now be? Perhaps their AI’s will assist them in determining how best to allocate resources.

Flying Police

The new Star Wars trailer came out last week. Star Wars appears to have taken on the traits of a religion for many. And while if a new religion is to emerge we prefer it to be based on Bill Murray, even we were captivated by news this week that Dubai is testing “Star Wars-style hover bikes that would be used by their police force. The Russian-made bikes were unveiled at a tech show last week and “Hoversurf CEO Alexander Atamanov posted on Facebook to say the company and Dubai police had signed a memorandum of understanding to mass produce the craft in the Dubai area.” The bikes are reported to fly up to 70 km/hour, fly at a height of 5 meters and have a range of six kilometers. Interestingly they are designed to fly “with or without a passenger.” The Dubai police wish to be able to zip over traffic in emergencies and perhaps more worrisomely, “It can recognize people in any area and identify suspicious objects and can track suspects,” Brigadier Khalid Nasser Al Razooqi, director of the Smart Services Department at Dubai Police, told Gulf News. Al Razooqi also told Gulf News that the hover bikes will be fitted with cameras connected to a command center and be used at tourist attractions in Dubai. We would have completely failed you if we did not provide video of the hover bikes complete with dramatic music, which you find below.

DUBAI POLICE HOVERBIKE!!!
704 likes	1230243 views

One of my first adult jobs was working for U.S. Representative John Miller. Even then I knew I was working for a special man, but as the years passed and political fashions changed to the loud, extreme and shallow, it became even more clear how special was the moral and intellectual clarity John brought to serving Americans, and really humans around the world, in what is sometimes called the people’s house. John was an early supporter of gay rights, played a role in the passage of the Japanese-American reparations bill, and worked for human rights around the world, often at great political risk to himself. He was fiscally conservative, a great environmentalist and as a local politician helped save the Pike Place Market. But it’s not his policy positions that distinguished him–fair minded people can disagree on what the best policy prescriptions are and even the best proposals contain trade-offs and unintended consequences. No, what set John apart was his integrity, diligence and willingness to change his positions in light of new information. I can remember many a discussion with John and his other advisors of what to do on an issue, a conversation full of facts, as well as philosophical discussions on how to balance different ideas and interests. He truly wanted to do what was best for America, the world and his constituents. During one reelection campaign, researchers discovered salacious material about his opponent. John refused to use it. He wanted the campaign to be about the issues, not his opponent’s personal life. Later, after leaving Congress, John became the US Ambassador-at-Large to combat human trafficking. He fought tirelessly to advance human rights around the world and arguably no one is more responsible for raising awareness of the sex slavery trafficking issue than John. David Simon’s new show, The Deuce, whether it knows it or not, is partly informed by John’s work. In his last public act, John wrote and published a novel about George Washington, celebrating our first president’s resistance to the corruption of power. At a perilous time when we need more leaders like John, the world has one fewer. John Ripin Miller died yesterday at age 79. RIP.

The Good News

In a week of tragedy and death, perhaps it’s time for a ray of economic sunshine. In the chart below you’ll see, courtesy of the Long View, that “every single manufacturing measure in the world is in growth territory.” This is taken from the Global Purchasing Managers Index which measures manufacturing activity of economies. Anything above 50 portends growth. And as you see, every single country, like customers at Applebees, is above that magic 50 line. Developed markets, at 54.2, are doing even better than emerging markets, who are at 51.7. But right now the entire world is in a synchronized march upwards. The Euro area is looking particularly strong as it recovers from a long slog of economic doldrums. Even Greece is showing signs of life. Now the worry is what goes up will eventually go down and it could be a synchronized swan dive as well, but for now, the world economy is a hopeful place to avert one’s gaze from the rest of the craziness.

Making the High Income Leap

Last week in analyzing China’s rural-urban divide, we noted that the education deficit in China poses a challenge to the country making the leap from middle income to high income status.* Over the last 70 years, 15 countries have made the leap to high income status. As Stanford’s Scott Rozelle points out, every single one of these fortunate fifteen had “three quarters or more of the working population completing high school while the country was still in the middle-income bracket.” But if, as we worried about last week, 400 million Chinese will be “cognitively handicapped,” that three-quarters figure will be difficult to obtain and breaking the high income status threshold difficult to achieve. As Rozelle says, “in the 79 current middle-income countries, only a third or less of the workforce has finished high school. And China is at the bottom of the pack.” But, as we also noted last week, China is well aware of the challenge and working to meet it. Whether China meets the challenge has huge ramifications not just for their country, but for the world economy as we’ll detail next week (we’re becoming like a serialized TV show all of a sudden–but we promise a better ending than Lost).

*The World Bank divides countries into low income, middle income and high income based on gross national income per capita, adjusted for inflation over time. 

Housing the Wealthy

In our spare time, we’ve been fixing up a hobby house structure in our backyard. We have built a wall, installed a window and soon will be installing a floor. As of yet, we still have all ten of our fingers, but we are willing to risk limbs because the price we can get for renting the humble structure are high. Here in Seattle, worldwide headquarters of INTN, housing has become increasingly expensive. Many blame rising housing costs on Amazon’s explosive growth, and certainly nearly 30,000 new employees are going to have an effect. But compared to other world cities, Seattle is a piker (a Pike Place piker). In fact, even the most expensive U.S. cities are cheap compared to the leading world cities. As you see in the chart below, Hong Kong has the highest price to income ratio in the world, followed by Beijing, Shanghai and London. There are more rich people in the world today and they are more widely dispersed throughout the world. The wealthy are driving up prices both in their home towns, but also in cities where they want to live. This is more evidence for our theory that cities are becoming far less interesting. Creativity and new things come from the muck, which increasingly will be outside of the big, shiny, everything looks the same blandness of today’s Ikea-like cities.

We’ve been hearing complaints about kids ever since we were one. From colleagues we hear complaints about millenials and what a pain they are. And yet, in our anecdotal experience, they seem much more mature, wise and put together than we ever were at their age. So while scanning the Internet stuck on a couch not wanting to wake the cat napping on our lap, we were pleased to come across a study backing up our anecdotal evidence. Apparently for the last 50 years scientists have been administering the “marshmallow test” where children are told if they wait 15 minutes, they will be given two treats. If they cannot handle being that patient, they only get one. This year’s testing results show,  “…kids these day are better able to delay gratification than they were in the past, corresponding to a fifth of a standard deviation increase in ability per decade.” The scientists do not know why there has been an increase in the ability to delay gratification.* In one of our favorite sentences of 2017 they write, “Unlike IQ tests changes**, where schools and textbooks have routinely engaged in teaching to the test, we are unaware of any formal training in the marshmallow task for schools.” So even as we search for schools providing formal marshmallow training, gratified that our cat finally awoke, we note that not all debt is the same, examine coal usage forecasts and soak you with the wettest countries in the world. It’s this week’s International Need to Know, gratifying your interest in the world around us without delay.

*We guess the elimination of lead in the environment had some role to play.

** Generational increases in IQ scores, the so-called Flynn effect, have been going up for decades.The kids are smarter than us

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

All Debt is Not the Same

We’ve recently seen a variety of visual depictions of debt around the world. For example, howmuch.net displays sovereign debt in G20 and OECD countries in a nice easy to read map (see below). For your reading pleasure below the map we list the top ten countries with the worst debt to GDP ratios in the world. Japan continues to top that list. Not all debt is the same, however. People have been predicting Japan’s debt doom for nearly two decades now. So far Japan has avoided financial catastrophe, partly because most of the debt is owed to themselves, not to other countries. It’s also worth noting that at least in the last couple years, Japan’s debt has stabilized a bit, halting the rapid increase in debt of the last decade. Greece’s debt (they’re number 2) has obviously caused them problems because they owe other countries, have been bailed out repeatedly and the EU (Germany) have shown no inclination to forgive Greece’s debt. What about the flipside of high debt? Estonia, Saudi Arabia and Russia have some of the smaller ratios of debt to GDP. I’d be willing to buy an Estonian ETF but I’d be far more leery of doing so for Saudi Arabia and Russia. There is no Jeffersonian ideal of debt–it is not all created equal.

The Future, Mr. Gittes

We continue to be less worried about America’s policy retreat on climate change measures than others (which is not to say we aren’t worried). Technological advances continue to point towards a cleaner future. The Energy Information Administration (EIA) recently released their 2017 International Energy Outlook. The report notes that world coal usage began levelling off in 2010. Petroleum usage continues to go up at a steady rate and natural gas at a somewhat faster one. Renewables, on the other hand, has seen a huge increase. That’s the past; the EIA also attempts to forecast the future.  What’s strange is that the organization’s forecast basically maintains current trend slopes. This is generally a smart forecasting technique–things often don’t change much (inertia is the third or at worst fourth most powerful force in the universe). But when technology is improving rapidly as it is in the renewables sector, we expect the Energy Information Administration’s forecasts to be way off. As renewables continue exponential growth and storage problems are solved we expect coal usage to not just level off but decrease. In fact, compare EIA’s forecast from 2013 to today’s reality (see second chart below) where they radically overestimated growth in coal usage. Remind us in four years to investigate how today’s EIA forecast fares (when this missive will be delivered via augmented reality technology).

When the Rain Comes

As you know, the worldwide headquarters of INTN is located in the great Pacific Northwest of the United States where we are known for our rain (we hope someday to open a satellite office in New Orleans). After a remarkably dry summer in which we saw nary a drop for more than two months, the advent of autumn has brought a renewal of our drizzly weather. As we wipe the mist from our glasses, in honor of the return of the rains, we present to you below the wettest countries in the world courtesy of the World Bank. To our surprise, Colombia is the wettest country in the world with 3,240 mm of rain on average per year. But Papua New Guinea is close behind, followed by Indonesia and Malaysia. Peruse at your leisure as we prepare a shipment of bumbershoots to these countries.

“As little as possible,” Jake Gittes responds when asked what he did as a cop in Chinatown. This quote from our favorite movie came to mind last weekend. We were in our front yard when we heard a cat meowing. We looked down and saw a small, cute, black and brown feline rubbing against our legs. We reached down to pet it and discovered it was skin and bones, which made us think it was either lost or abandoned. The cat followed us onto our porch. It was still on the porch when we returned from a bike ride. The next day while working on a construction project in our backyard, it was a constant companion, less scared of the power tools than we were. So we posted on Nextdoor.com (a website for busybodies, it is the world’s fifth worst invention, still a few spots behind Twitter which, as you know, is the world’s worst invention) and asked if anyone was missing a cat. A woman named Jan texted us while we were at a baseball game that her cat has been missing since July. She asked if she could go into our front yard to see if this cat was hers. We said sure and half an hour later Jan texted us saying it was not her cat but she had taken it back home with her and was going to take it to the vet to see if it was microchipped. This seemed a bit presumptious to us–others in our household referred to it as kidnapping. We got home from the game and saw a Mom and daughter walking down the street with flashlights, looking under cars. We asked if they were missing a cat. They were. We showed them a photo of the cat we had found and it was indeed their cat. It turns out the cat was skin and bones because she is 18 years old, not because she was lost or abandoned. We then explained a woman on Nextdoor.com (an evil, evil site) had taken, catnapped, their cat. We texted Jan who embarrassedly came right over to return the cat to its rightful owner. The poor, ancient cat had apparently been very distraught at Jan’s house–of course, the whole catastrophe could have been avoided. Forget about it Jake, it’s Cattown. Even as we miss our feline friend, we meow over Mexico-China relations, scratch and crawl through historic hurricane data and purr over where the best Halal food is. It’s this week’s International Need to Know, a dog’s world of information about our cat-ruled world.

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

Walls, Bridges, Belts, Roads!

Apparently BRICS aren’t being used to build walls anymore. Mexico’s President Enrique Pena Nieto was in Xiamen, China (one of the more beautiful cities in China we’ve traveled to) for the Brazil-Russia-India-China-South Africa (BRICS) summit and also met individually with President Xi. At this bilateral meeting, Xi said, “Both sides should synergize their development strategies, make the most of their respective advantages to build a supply chain that links China and Mexico and radiates to the surrounding regions.” Xi also welcomed Mexico’s involvement in the Belt and Road Initiative, an initiative to build trade routes along the old silk road. That road is now stretching across the Pacific apparently. We’ve noted China’s increasing engagement around the world, now they are talking intimately with the United States’ southern neighbor, talking about belts and roads instead of walls. For Mexico’s part, China is its third-largest export market and second-largest importer though Mexico’s trade with China is many magnitudes smaller than its trade with the U.S. Nonetheless, there are many reasons for Mexico to pay closer attention to China, even as its northern neighbor distances itself.

Strong Winds of Change

We have maintained in this space that the world is far better than it used to be and we stand by our stance despite worrying trends (which we have also covered). We recently watched with worry when during Hurricane Harvey a friend posted on Facebook a photo of the water lapping up towards his front door. He thankfully evacuated safely and his house was far less damaged than others. We watch with worry as Hurricane Irma* devastates countries to the south of us and bears down on Florida. But, we also remember that hurricanes are not as deadly as they once were despite the fact that climate change may be making them stronger. Below you see a list of the world’s deadliest hurricanes, almost all taking place more than 50 years ago. Economic and social growth have given societies better tools to deal with natural disasters. We hope, even in the midst of worrying trends, even as some retrench efforts to confront climate change, that the world will continue to grow economically and socially in the future so that tomorrows will continue to be less deadly than todays.

*A hurricane named Irma immediately conjures up memories of the soul queen of New Orleans, Irma Thomas, singing It’s Raining live at French Quarter Festival in 2013. We were soaked, we were happy. Our best wishes to all affected by Hurricane Irma. 

Where to Travel for Halal Food?

Years ago we were working with a business group from Abu Dhabi. We took them out to dinner to a restaurant that served halal (permissible food and drinks in Islam). However, they had arrived much earlier in the day and the hotel they were staying at was located nowhere near halal friendly restaurants. Needless to say they were quite hungry at dinner. So if you’re Muslim, where are the most Halal/Muslim friendly places to visit? As it turns out, Mastercard and CrescentRating collaborated to create an index of such places. Not surprisingly, the top ten is chock full of Muslim countries or those bordering such countries (we’re looking at you, Singapore). Interestingly, the U.S. ranks above India, and both are well above China and Russia. Below you’ll find the top 20 and at the link the full list for your hungry perusal.