Convoluted random thoughts put into paper, then typed using a keyboard. Sometimes I even use my phone. I write about finance, tech, politics, and culture (mostly terrible movies).
Transitions like Bolivia’s tend to be fluid and unpredictable. The perception of legitimacy, or a lack thereof, can be decisive. But today’s world rarely fits the black-and-white narratives that emerged from the Cold War and that still shape expectations that coups and revolts are morality tales with clear heroes and villains.[...]
Coups often come after mass uprisings calling for change, with generals describing their interventions as temporary measures to restore democracy. And few, if any, popular uprisings succeed without military support, if only in the form of generals refusing to come to the government’s aid.
The political scientist Jay Ulfelder has referred to that as a “Schrödinger’s coup,” after the Austrian physicist, Erwin Schrödinger, writing that such cases “exist in a perpetual state of ambiguity, simultaneously coup and not-coup” with no hope of forcing the events into a “single, clear” category.
Let’s not mince words. It’s a coup. When an elected president is forced to resign by the head of the armed forces, after weeks of escalating street violence and a police mutiny, the word “coup” fits. [...]
The United States welcomed Morales’s ouster, and the U.S. presence in Bolivia, particularly in drug policy, has long been unhelpful. But “The CIA is behind everything bad in Latin America” is a lazy analysis by those who don’t care to understand the internal dynamics of other countries. It’s also one which inflates the omnipotence — and interest — of the U.S. while denying the agency of domestic actors. (The United States has not had an ambassador in Bolivia for more than 10 years, and both the DEA and USAID were kicked out of the country by Morales years ago. Far from its Cold War reputation as an all-powerful puppet master, the U.S. now treats Latin America with indifference and neglect. Today, the foreign power that matters in the region is China.)
The notion that Evo Morales was an obstacle to the exploitation of Bolivia’s lithium potential, and that his ouster in some way is meant to open the door for multinationals to tap Bolivia’s mineral wealth, is upside down. For more than a decade, Morales talked of turning Bolivia into a lithium powerhouse and made the full-scale development of the country’s mineral resources a staple of his economic vision. While Morales spoke of using these resources to benefit all Bolivians, deals that would bring the benefits he claimed never really materialized. [...]
[Globally] China dominates the production of lithium-ion batteries, for the same reason it rules so many other areas of manufacturing: moderately cheap, well-educated labor mixed with extensive infrastructure, combined with major government investment in electric vehicles. That’s an issue U.S. strategists have raised in the last few years, but the problem isn’t a lack of supply of lithium itself; China sources most of its lithium from Australia and Chile, rather than domestic mining.
Chile and Argentina have far higher-quality reserves of lithium and more favorable climatic conditions for the type of lithium mining carried out in South America. That means they are much, much more appealing as a source of lithium than Bolivia is, at least with current technology. They are also both allies of the United States, as is Australia, the other major lithium producer. In other words, there’s no need for Washington to resort to shady means to ensure a questionable source for something it already has a plentiful supply of.
During the course of the phone call from the restaurant [in Kyiv, Ukraine], [US Ambasssador to EU Gordon] Sondland also consulted with Trump on another matter of importance to the president at the time: efforts to free the American rapper A$AP Rocky from jail in Sweden at the request of reality television star Kim Kardashian.
The same day as his July 25 phone call with Zelensky, Trump lashed out at Sweden on Twitter and demanded the nation free the American rapper despite his assault charge from his role in a street brawl.
“Give A$AP Rocky his FREEDOM,” Trump tweeted. “We do so much for Sweden but it doesn’t seem to work the other way around. Sweden should focus on its real crime problem!”
Sondland, according to [American diplomat David] Holmes’s opening statement, advised Trump to “let him get sentenced, play the racism card, give him a ticker-tape when he comes home.” Sondland added that Sweden should have released the rapper on Trump’s word, but the president could at least tell the Kardashians he tried, according to Holmes’s recollection.
According to a senior White House aide, who, like others, spoke on the condition of anonymity to discuss a diplomatic issue, Sondland was involved in the A$AP Rocky effort because of his relationship with Jared Kushner and Ivanka Trump, and because Trump saw him as “the Europe guy.”
Apart from sending national security adviser Robert O’Brien, who was then his top hostage negotiator, to intervene in the matter, Trump pressured Sweden’s leader on a phone call to release the rapper, saying that the United States does a lot for Sweden and Sweden should do this for him, according to a U.S. official.
Swedish officials tried to explain they needed to let the courts deal with the matter, but Trump was angered, saying it should have been easy for the Swedish government to do as he asked, the official said. Swedish officials were baffled by Trump’s aggressive involvement in the case, the official added.
In early August, Sweden released A$AP Rocky from jail after he was detained for a month on assault charges. According to the official familiar with the episode, Trump was frustrated that he didn’t get enough credit for securing the rapper’s release.
'“I think people forget I worked for 10 years as a management
consultant,” Romney said, referring to his time at Bain & Company.
“Which meant I was able to make no decisions, I was able to get nothing
done, and I had to try and convince people through a long process.” In
retrospect, it seems, he was destined for the U.S. Congress.'
I don't know about you, but to me, it feels like the past couple of years have been, or will be, significant turning points in world history.
Let's take the future of work, for instance. A depressing Deloitte report from April suggests that, in essence, there will be more work for the same (or less) pay going forward. Looking from my own personal perspective, as a (finance) professional working in Indonesia for 15+ years, I'm already seeing big changes. As long as I can remember, every engineering student's dream is to have a comfy career at a foreign oil company; nowadays, the likes of Exxon Mobil, Chevron, BP, and Schlumberger have mostly pulled out of the country, thanks to mismanagement/bad policy domestically, and more interesting shale developments in other parts of the world. Just ten years ago, management/MBA students all flocked to investment banks, management consulting, or private equity jobs. Today, those IB shops have shuttered their Jakarta offices, and PE outfits have stayed quiet (maybe unexciting IRR numbers are part of the reason?). Consulting is still around, but in a much smaller scale: mostly serving government contracts. The dream jobs today? Startups! Wonder how long this trend will last (/cough WeWork) -- so let's all enjoy this Softbank subsidy while it's still there.
Don't forget BREXIT -- yes it's still in the news, and it's still happening...someday? We've grown tired of the (usually racist) rhetoric, failed House of Commons votes, and endless delays -- basically all the bad stuff that leads to Boris Johnson. But when the dust settles, Brexit will most likely be the biggest moment in European history since the WWII. There will be dislocation regardless of what happens end of this month, and who knows what/where dominoes will fall next. Grexit was an over-hyped dud, but London is Europe's financial powerhouse!
.@EUCouncil will meet this week (17-18 October) for the last scheduled #EU leaders’ meeting before 31 October.
At least it's made a celebrity out of John Bercow.
Also don't forget CHINA!
Hong Kong has been Asia's financial capital for my entire lifetime. I've only been there only 3 times in the past 20 years on brief business trips, but I found the city safe, welcoming, easy to navigate -- always familiar. Back in 1997, I was too young to understand what the handover meant, but looking at it now after 5 months of unrelenting protests -- and no sign of Beijing giving in -- in all likelihood, Hong Kong's stature will be forever diminished. Bigly. All the locals with means have already fled, bringing along their fortune outside the reach of CCP's grabby hands. China will be pained by this, given its insurmountable homemade economic problems. And the rest of Asia will not escape unharmed. Even Lebron James feels the pain.
[You may think] China has a Streisand-effect problem, in which trying to censor an event creates even more publicity. But that assumes the Chinese government doesn’t understand the Streisand effect, and that can’t be right, because if one government understands attention dynamics online, it’s China’s. [...] the Chinese government has been very good at burying important news by distracting from it with other, flashy but unrelated news. This shows a subtle and powerful understanding of the Streisand effect: Instead of censoring, China diverts attention. It’s actually a myth that everything is censored in mainland China. The government tends to let some things circulate, partly as a means to gauge public opinion, which helps solve the problem that plagues all authoritarian governments: They become blind to trouble spots.
[...] maybe we are entering a new age when China will push around Western companies to make its point. For all we know, Xi Jinping is looking across the Pacific at the crumbling governance, the failing infrastructure, the hollowed-out manufacturing capacity, the myriad elite failures, and the general decay in Western societies and has decided that the time is here to confidently declare that if you want to do business with China, its China’s way or the (crumbling) highway. He might have decided that the time when it needed to deploy strategic silence on the divergence in stated values is over, essentially telling us “Free speech, free shmeech” and getting away with it.
Or, alternatively, in this truly global and interconnected world, China might be experiencing its own form of failure and weakness, with a more and more centralized rule pushing a cult of personality around the leader. After all, China has its own problems with decadence, corruption, and inequality. Many high-level officials have families with multiple passports and expansive overseas wealth. A mixture of authoritarian malaise and loss of agility might be causing the country to lash out, without proper strategic analysis. This same dynamic seems to be at work in China’s approach to the Hong Kong protests, which could have been defused early through a few symbolic concessions. It’s as though China doesn’t even understand a city that is under its own jurisdiction.
We've all been here. At first your new partner is exciting and great on Fox News. A year later you're sleeping in separate bedrooms and you start thinking about your ex https://t.co/9L6CGGA0HV
'...President Donald Trump's son-in-law and senior adviser questioned [Palestinians'] right to self-determination, putting the burden on them to prove they are deserving of freedom, justice, equality and human rights.
The distinction of being innately less deserving of human rights and freedom is reserved for peoples facing the brutal oppression of colonialism and racism. In the role of historical colonizers, white men considered themselves a superior people with a right to deny everything and anything to others who are less than—only the white man could know what is best for the backwards and savage peoples under his rule. [...Recently,] these attitudes have been dressed up in the language of democratization, as perhaps best captured in the policy of the George W. Bush administration. No form of self-determination for Palestinians could be supported, Bush made clear, until "the Palestinian people have new leaders, new institutions and new security arrangements with their neighbors." Sounds an awful lot like Kushner.
In other words, the fundamental sequence remains the same: The Palestinian people must prove they are deserving of their human rights, their freedom and their equality—until they do so, their oppression is justified. Such a formula is only possible in a framework where people are not created equal. Those who are inferior must accept the dictates of the superior group, including acquiescing to external actors' decisions in regards to their governance, quality of life and rights.[...]
A just peace cannot be built on a foundation of racism. The burden should not be placed on those whose rights and freedom are denied, but rather on those who are denying them. We must move away from outdated frameworks that present the Palestinian people with false choices and threats that seek to strong-arm them into accepting their own subjugation.'
'The Democratic presidential field has spent most of the week tying itself in knots over whether prisoners should be able to vote—an important but largely abstract debate. Meanwhile, Florida Republicans are close to passing a law that allows felons to vote after serving their time, but places serious hurdles before them.
The debate demonstrates much about the two parties. It contrasts the Democratic tendency to focus on national solutions to problems with the Republican emphasis on state-level policy. It shows a Democratic tendency toward abstraction, and a Republican emphasis on action. And it suggests why conservative policy ideas are winning across the nation, despite evidence that America is a center-left country.
The Democratic Party [...] tends to believe in top-down government solutions, making Washington a natural locus for policy, while Republicans have long emphasized local control. It’s also historically contingent. Starting from the 1930s, Democrats often held a strong advantage over Republicans in national politics.
Since the 2010 election, Democrats have also been badly overmatched at the local level, and while the party made significant gains in 2018, Republicans still have the upper hand in state capitals. That has allowed the GOP to implement its policy views on a range of issues. Republican-led legislatures have expanded gun rights, restricted abortion rights, and hamstrung organized labor, to choose just a few. On the question of felons and voting, [...] Republican actions on the state level speak louder than Democrats’ conversations.'
'...what motivated Iranians to support the revolution en masse was a desire to rid the country of imperialism. As a prominent historian of Iran, Ervand Abrahamian has argued that the 1979 revolution should be seen as a continuation of the national struggle for liberation that was cut short in 1953 by a U.S.-orchestrated coup.
In a first for the CIA, the United States deposed democratically elected Prime Minister Mohammad Mossadeq, reinstated Shah Mohammad Reza Pahlavi, and took control of Iran’s oil fields. Domestically, no matter what the shah did in that 26-year interim between 1953 and 1979, the coup cast its long shadow over his rule. His perceived illegitimacy was tied to the sentiment that he did the bidding of the Americans and Brits and sold out his country’s national integrity for power and wealth. [...]
Now, what does this have to do with Iran’s relationship with its proxies? In the 40 years since the revolution, the Islamic Republic has supported groups that are actively engaged in struggles against foreign occupation, whether in Lebanon, Iraq, or the occupied Palestinian territories. (This analysis also drove its policies in Syria, where it believed the United States, Europe, and Israel were using domestic groups, and later mercenaries, to topple Assad for geopolitical purposes.) When one pays close attention to the discourse of these groups, from their official statements to their media output, the emphasis is on sovereignty and the fight against imperialism. Of course the symbolism of Islam as a cultural and political identity is also present, but it is not the driving force...'
'Tiananmen would be the last mass democracy movement in China. China has not seen anything even remotely approaching the scale of what happened in 1989, when students and workers took not just to the streets of Beijing but occupied the center of many major Chinese cities. The only major anti-government actions since then have been fueled by national or ethnic sentiment in marginal territories such as Xinjiang and Tibet. [... ]
China is now the top trading partner of, and foreign investor in, most of its neighboring countries. That may be having a coercive effect on neighbors such as Cambodia, where long-term dictator Hun Sen’s crushing of the civil opposition in the last few years took place with Beijing’s backing and blessing. In Thailand, while the junta maintains a veneer of democracy, relations with China have grown ever closer even as Washington has chastised them.
“China’s influence has been there after countries took an authoritarian turn,” said Maiko Ichihara, an associate professor at the School of International and Public Policy at Hitotsubashi University in Tokyo. Chinese money and investment can buffer what could have been, in the past, sanctions or other reprisals from Western countries. “Democratic backsliding has been maintained due to the economic influence of China.”
It also means the role of the region’s democracies is limited. Taiwan, South Korea, and Japan were, in previous decades, democratic and highly developed, and offered models for China. Now, the tables have turned. “In the 90s there was the idea that countries like Taiwan and Japan could push for change in China,” said [China expert Isaac] Stone Fish. “Now, a lot of those countries are trying to figure out how to prevent China from changing them.”'
1. Michael Wear on the American debate over abortion rights:
'Abortion politics in 2019 is a morality play about what happens when one side has all the political power, yet feels culturally embattled. In this atmosphere, victories are not satisfying if they leave the other side with a foothold, a vestige of respectability. [It] is no longer about policy wins, but about establishing dominance. This is why Governor Andrew Cuomo could not be satisfied with the passage of the Reproductive Health Act, which eliminated several restrictions on the procedure, but instead had to light up the Empire State Building pink, to declare that abortion rights were now creedal in New York. It was not just the passage of the Reproductive Health Act, but specifically the display of cultural force, that made abortion opponents feel so embattled and isolated. This dynamic was also evident in Alabama, where the people in power hold the opposite position on abortion as their counterparts in New York and recently passed H.B. 314, a bill that virtually outlaws the procedure.
One scene from the Alabama Senate debate furnishes a quintessential example of the decline of our democracy, of the diminishment of any capacity our political process might have had to help us work through difficult issues together. During the committee markup of the bill, lawmakers passed an amendment to provide an exception for rape or incest. On May 9, as H.B. 314 was headed toward a final vote, Alabama’s Republican Lieutenant Governor Will Ainsworth broke protocol by stripping out the amendment without making a motion or acknowledging his Democratic colleagues’ requests for a roll-call vote. Democratic State Senator Bobby Singleton shouted, “There was no motion. You didn’t even make a motion!” Ainsworth simply ignored his colleague’s interjections.'
'Inequality has been written into the DNA of civilization ever since humans first settled down to farm the land. Throughout history, only massive, violent shocks that upended the established order proved powerful enough to flatten disparities in income and wealth. They appeared in four different guises: mass-mobilization warfare, violent and transformative revolutions, state collapse, and catastrophic epidemics. Hundreds of millions perished in their wake, and by the time these crises had passed, the gap between rich and poor had shrunk.
The first of these forces was very much a creature of the industrial age. Earlier wars had produced mixed results, as victors profited and losers paid. The Civil War is another example: It launched the careers of John D. Rockefeller, Andrew Carnegie, and other Northern plutocrats, but ruined Southern slave-owners. Not since the times of the ancient Greeks had intense popular military mobilization (paired with egalitarian norms and institutions) helped curb economic inequality.
Second are revolutions that truly transformed societies—the sort that were born of the two world wars. From 1917 on, communists in Russia, China, and elsewhere confiscated, redistributed and collectivized private wealth, and set wages, leveling inequality on an unprecedented scale. [...]
If history is any indication, then, the resurgence of inequality since the 1980s should not have come as a surprise. The effects of violent leveling invariably abate over time: Populations recover when plagues subside, failed states are replaced by newcomers. By now the aftershocks of the 20th century’s great wars have faded. Top tax rates and union membership are down, communism is defunct, and globalization, however reviled, is (still) in full swing. The four levelling forces will not return any time soon: Technology has made mass warfare obsolete; violent, redistributive revolution has lost its appeal; most states are more resilient than they used to be; and advances in genetics will help humanity ward off novel germs. In the coming decades, the dramatic aging of rich countries and the pressures of immigration on social solidarity will make it ever harder to ensure a fairly equitable distribution of net incomes. And on top of everything else, ongoing technological change might boost inequality in unpredictable ways, from more sophisticated automation that hollows out labor markets to genetic and cybernetic enhancements of the privileged human body.'
3. Khaled Elgindy on the Israel-Palestine peace process:
'... laying out an economic plan ahead of a political vision is simply the wrong way around. As many analysts have pointed out, prospective donors and investors are unlikely to be forthcoming when they do not know what the endgame is or what it is they are being asked to invest in. Previous U.S. presidents, from Ronald Reagan to Barack Obama, also tried to promote “quality of life” for Palestinians without directly challenging the Israeli occupation. Moreover, the idea that so-called economic peace could be a substitute for a meaningful political horizon has simply never panned out.
By focusing on economics, the U.S. administration has fundamentally misdiagnosed the problem. As numerous United Nations, World Bank, and other reports have found, the greatest obstacles to Palestinian economic growth are restrictions imposed by the Israeli occupation in the West Bank and its ongoing siege of the Gaza Strip. In other words, what Palestinians lack is not funding but freedom. As the Palestinian American businessman Sam Bahour recently put it, reviving the Palestinian economy “doesn’t require a grand plan, nor does it require a grand workshop. It requires Israel getting its boot off at least the economic part of our neck.” [...]
But the biggest reason to doubt the feasibility of the administration’s plan is its own record. Since recognizing Jerusalem as Israel’s capital in December 2017, overturning 70 years of U.S. policy and taking the hotly contested issue of Jerusalem off the table, the administration has closed the Palestinian mission in Washington and systematically eliminated virtually every form of U.S. economic and humanitarian assistance.[...] The proposition that [the U.S.] is now going to spearhead the international effort to promote investment in Palestinians or work toward the betterment of Palestinian lives is nothing short of fraudulent. Indeed, while U.S. officials have always had a certain blind spot with regard to Palestinian needs and aspirations, never has a U.S. administration shown as much open hostility toward Palestinians and their well-being as the Trump administration.'
'There is more than one way to decide who is deserving of what. One is by need: Some people have more than they need, and others need more than they have. Even when liberal leaders describe policies that are beneficial to everyone, they make it clear that the most important beneficiaries are those whose needs are most urgent. [...] Still, there are other ways of judging what’s fair. Conservatives tend to value equity, or proportionality, and they see unfairness when people are asked to contribute more than they should expect to receive in return, or when people receive more than they contribute. [...]
American liberals looking fondly over their northern border often misunderstand why policies considered left-wing in the United States are so popular in Canada. Middle-class Canadians support their health-care system not because it’s good for the needy, but because it’s good for themselves. When they get angry about threats to their health-care system, it is because they take the threat personally—they are defending their own interests rather than those of some underprivileged stranger.'
'The Belt and Road Initiative is as much a domestic initiative meant to address structural weaknesses in the Chinese economy as it is a grand foreign-policy strategy. Given a combination of poor demographics, growing international hostility to its trade policies, and the specter of weakening domestic demand, Beijing cannot rely on homegrown supply and demand to solve its current and future economic problems. The Belt and Road Initiative represents an attempt to use China’s enormous financial reserves to create new markets for Chinese goods, services, and unskilled labor. That’s why the use of Chinese labor to build Belt and Road infrastructure is so often part of the deal. Recipients of Chinese investments are effectively financing Beijing’s efforts to manage its internal economic problems. Understood this way, the Belt and Road Initiative reveals Chinese weakness rather than strength. And that’s why a judo strategy could be so effective.
The United States should start by using existing international norms—set by multilateral institutions such as the World Bank, the International Monetary Fund (IMF), and the Organization for Economic Cooperation and Development (OECD)—to constrain China’s predatory lending practices and the political leverage they bring. For example, the OECD has long-established norms against the use of tied aid—funds that require recipients to use that foreign aid to purchase goods and services from the donor. Tied aid is frowned on because it forces recipient countries to spend their money inefficiently. And even if Belt and Road funding—which primarily takes the form of loans—does not formally constitute foreign aid, Beijing often violates the spirit of that principle by mandating that infrastructure projects use Chinese contractors...'
* * *
Okay, I'll give one comment: politics are *always* local (domestic), even when it concerns/affects foreign relations.
All of the above headlines share one common thread: they are conditions directly caused by, or exacerbated by, climate change. Perhaps you think it's just a "global" problem that doesn't affect you, maybe only those living in Middle Eastern deserts or around the Arctic Circle. But Jakarta also? See, not even my kampung is spared.
... So this lead me to spend the weekend going through the 2018 IPCC report, which made a splash last October. The full report is 400+ pages long and written in an esoteric format (because it is not original research; it's basically a summary of other people's existing primary research). I skipped the lengthy PDF download (it's even longer than the Mueller report) and went straight to the "Summary for Policymakers", which is still 32 pages long, and read the charts first. Still, it's amazing what we can learn by browsing a handful of diagrams -- especially for a layman with zero knowledge of environmental science.
So the "Global Warming of 1.5⁰C" by the Intergovernmental Panel on Climate Change is really a misnomer. We are really on pace for something like 3-4⁰C of warming (against a baseline of year 1850 -- approx. the start of the industrial revolution, when we started using fossil fuels en masse). The paper talks about 1.5 degrees, but it's an extremely optimistic scenario based on aggressive transformation of the global economy. Nevertheless, the research is unequivocal that the warming is anthropogenic -- caused by human activity -- which is good because it means we can actually do something about it.
The direct impact of climate change is devastating:
Sea-level rise at least 10cm for every 0.5C rise of global temperatures, and ice sheet loss is irreversible over >100,000 years
Climate-related risks to health, food security, and water supply
Damages are estimated at US$54 trillion worldwide.
Avoiding the most serious damage requires massively transforming the world economy and energy usage within just a few years. If you thought the Green New Deal was batshit crazy, then brace yourself:
Damages will be spread worldwide but unevenly. >50mn people in the US, Bangladesh, China, Egypt, India, Indonesia, Japan, Philippines and Vietnam will be exposed to coastal flooding
To prevent >1.5C of warming, the report said, greenhouse pollution must be reduced by 45% from 2010 levels by 2030, and 100% by 2050.
By 2050, use of coal as an electricity source would have to drop from nearly 40% today to between 1-7%. Renewable energy such as wind and solar, which make up about 20% of the electricity mix today, would have to increase to as much as 67%.
Now let's go to the charts:
Since the industrial revolution, it took us some 140 years to pollute the earth and raise global temperatures by 0.5C; the next 0.5C took us just 30 years; and the next 0.5C is expected to take us <20 years, if not sooner. It's clear that we've taken earthly resources for granted without much care of what's left behind.
The above shows that our civilization produces 40 Gigatons of carbon emissions every year, and that we need to reduce it *down to zero* in just 30 years to achieve our targets. Can we just blame China and press them to, like, do something? Let's turn to MIT Technology Review.
So, the answer is a resounding "No". China's is the highest in the world, but even combined with USA, EU, and India, they amount to just 15% of annual greenhouse emissions. This is a global problem in desperate need for a worldwide, coordinated solution.
Humanity has shown great ingenuity and staying power in resolving seemingly existential threats. Remember the hole in the ozone layer caused by aerosols and CFC? It's healing, and should be completely "cured" by 2030.
But if we've learned anything about American leadership on this greatest challenge of our lifetime, it has failed us.
Whew it's been a big week in the tech/startup world.
1. Uber IPO went sour
The ride-hailing giant capped off its tumultuous journey with a NASDAQ listing Friday. Shares disappointed, falling well below IPO price, but the company still commands a whopping $69bn market cap.... which is still lower than the pre-IPO valuations at which investors in the past 3 years entered. Maybe it's because Silicon Valley loves Uber -- its constant fights, breaking of laws, habit of pouring VC money (=lobbyists) onto problems -- more than the wider public does?
China's Starbucks/convenience-store-coffee competitor Luckin Coffee listed on NASDAQ Wednesday. Shares fell below IPO price -- not unlike Uber and Lyft -- but the barely-two-year old 2,100-strong coffee chain still raised $560m, putting its market cap at $4.0bn. Luckin has achieved "hyperscale", but let's hear it from Peking University professor Jeff Towson on the bottom line:the Chinese "don't seem to really like coffee" that much, so do any of those metrics even matter?
Maybe it's just another case of China imitating a Western invention, and replicating it to scale [usually with the help of friendly government regulations/direct support]. -->See: Weibo.
Outlet at Jakarta's Grand Indonesia mall
If that seems rough, here in Indonesia a number of similar startups (Kopi Kenangan, Fore, Tuku, etc) looks to be modeled closely after Luckin. Expect scenes like this in other markets.
3. WeWork also plans for IPO, skepticism abound
Co-working behemoth WeWork is a really strange animal. Just like Uber, it's backed by Softbank, so operating losses never seem to faze them. It's already the biggest tenant in Manhattan, and it's moved into co-living and other co-activities that generate no profits whatsoever -- I guess even the company doesn't believe its own core business could be viable. It blindly focuses on the high-end segment, seemingly disregarding local market nuances. Now founder Adam Neumann wants to set up a real estate investment fund (named "ARK", after Noah, naturally) to buy up office properties to lease to WeWork. Unsurprisingly everybody's screaming bloody murder conflict of interest.
Articles about WeWork are eerily reminiscent of how people described the past decade's housing crisis. Just like the mid-2000s, "property values always rise... ", but now it's "... thanks to WeWork's presence". Sure its sites are hip and wildly popular with clients, but that itself doesn't necessarily make the business model sustainable. [I too can pitch an idea: why don't we sell $100 bills for $10?] Ellen Huet from Bloomberg notes:
'...even by the standards of its cash-incinerating startup cousins, the company’s business model—taking out long-term leases and renting out short-term parcels—doesn’t deserve the favorable treatment of a tech company and looks glaringly vulnerable to an economic downturn as the global bull market in equities stuttersteps toward Year 12. “They don’t make money even with the economy roaring,” says Scott Crowe, the chief investment officer at CenterSquare Investment Management, which focuses on real estate. “If the economy softens, [it's all over].”'
4. Netflix faces impending doom
The video streaming/cord-cutting pioneer has less than 180 days to answer to a new competitor. Disney is launching its video streaming platform, Disney+, and it will undercut Netflix's subscription pricing*and* pull all of its content out of Netflix. We are talking all of Marvel, Pixar Animations, Star Wars, ESPN, NatGeo, Modern Family, The Simpsons, and all the classic characters like Mickey Mouse and Donald Duck.
Content is king, and Disney is still the king of content, for better or worse.
5. Tight driver market can bring autonomous trucks sooner
There's actual interesting development within autonomous vehicles, and it has nothing to do with Uber. The US Postal Service, working with startup TuSimple, is testing self-driving trucks to deliver mail across Arizona, New Mexico and Texas. USPS expects the technology to improve delivery times and costs, noting severe driver shortages and regulatory constraints among interstate freight haulers.
...So the interwebs went crazy last week with the first-ever photo of a black hole, and with the young computer whiz who was part of the team. So what's the deal with the supermassive black holes, we've all seen pictures of them, right?
Concept art of an accretion ring and jet around a supermassive black hole. Although this has been our picture of how black hole engines ought to work for a long time, the Event Horizon Telescope has provided new evidence validating it. (NASA/JPL-CALTECH)
In case you didn't notice, everything we've seen have been artist illustrations (or Christopher Nolan's sci-fi) based on unproven theory, and this real-life picture shows that theory is, at the very least, on the right track. But I'd say it's not really about black holes, it's a lot more profound.
We live in a depressing world plagued by wars, bigotry and xenophobia, criminality, and declining confidence over traditional institutions -- governments, culture, religions, and science. So never take for granted the massive accomplishment -- something to be very proud of -- that we are able to link up 8 telescopes from Greenland all the way to Antartica, undertake coordination among 13 scientific institutions, and manage a global, multi-year effort towards one single goal. That blurry orange blob is just the start -- not the end -- of a major scientific endeavor.
As with most scientific work, oftentimes we just don't know where things would lead to. Viagra was discovered when chemists were working on heart disease drugs. Alexander Fleming accidentally found mold as he was working with Staphiloccocus bacterium, leading to an antibiotic that has transformed modern medicine and saved millions of lives.
For the next 100 years, the single biggest challenge facing humanity is climate change. We've already seen its adverse effects, especially on some of the most vulnerable societies like the Middle East/Africa and Latin America, but also wealthier parts of Europe (Brexit, anyone?) and the US (California wildfires, Colorado River drought, etc). Many (most?) scientists believe climate change is anthropogenic, which is actually encouraging, because it means we can do something about it. Astronomy as a science is highly relevant in this effort, because as we see more unprecedented extreme weather events, we can look for examples out beyond our home planet. Climatologists have studied Venus, seeing what earth may look like when impacted by runaway greenhouse effect. When we study Jupiter and Saturn, we can see gigantic permanent storms larger than the earth's diameter.
So we may not know where studying black holes will lead us. But we're only scratching the surface now, and chances are, we will need that knowledge for our long-term survival.
So this pic went viral on Twitter today. Aside from a misleading case of survivorship bias, it also completely ignores the big breaks that each founder caught. Malcolm Gladwell even wrote an entire book about it, and it was so popular that even I read it.
Not saying we all could succeed "if only we had that rich uncle", but there's no need to belittle our own limitations; in most parts of the world, the economy is propelled by small businesses.
"I personally believe that US Americans, like the Iraq, and South Africa, don't have maps"
I haven't written about what's happening in Venezuela, except for that time when I showed the John Oliver episode below (featuring a somehow-not-too-funny Wilmer Valderrama and a very sassy Popeye), or when John Bolton strangely pointed at Venezuela in his axis-of-evil-redux speech. Despite my best effort, it's just annoyingly difficult to find an expansive writeup that doesn't just dwell on mistakes of recent past. So recently I read an excellent article on the crisis that not only gives nuanced historical context (beyond "people are eating rats because socialism") but also elaborates as to why we should pay attention to it.
So isn't Venezuela just a basket case of crazy people with ass-backwards ideology and no money?
As usual, the answer is a bit more complicated. The hometown of Simón Bolívar brewed a perfect storm, mixing a potent concoction of corruption and gross economic mismanagement in a monumental scale. However, when we dig deeper, surprisingly certain key factors are wholly unrelated to the Chavismo ideology.
Dr. Nafeez Ahmed, former investigative journo for The Guardian, sees Venezuela as symptomatic of the end of the oil era. It's not that there's no more oil (remember "peak oil", from like ten years ago?); in fact the shale revolution in North America means there's "enough oil to fry the planet". It's just the economics of oil have been upended, and Venezuela's 32mn population is the first large-scale victim. The country's crude production peaked in 1997 at 3.5mmbopd; over the last two decades, output continued to fall to just 1.0mmbopd in February, or 72% drop (!!), according to OPEC.
"[1970s Venezuela boasted] a stronger social safety net than any of its neighbors and is making progress on its promise to deliver free health care and higher education to all its citizens. It is a model of social mobility and a magnet for immigrants from across Latin America and Europe. The press is free, and the political system is open; opposing parties compete fiercely in elections and regularly alternate power peacefully. It sidestepped the wave of military juntas that mired countries in dictatorship. Thanks to a long political alliance and deep trade and investment ties with the United States, it serves as the Latin American headquarters for a slew of multinational corporations. It has the best infrastructure in South America. It is still unmistakably a developing country, with its share of corruption, injustice, and dysfunction, but it is well ahead of other poor countries by almost any measure."
The 1973 OPEC oil embargo and the price shock brought wealth to Venezuela -- which by then was producing and exporting well over 3mmbopd -- but even then, technocrats saw plenty of red flags. Oil minister (and OPEC co-founder) Juan Pablo Pérez Alfonzo presciently warned in a prophetic 1976 speech, "you will see, oil will bring us ruin... [oil] is the devil's excrement," foreseeing the pains that his country will suffer from.
Sure enough, crude prices normalized in the next decade, and the economy's rapid growth quickly came to a halt. Lower petroleum revenue meant cuts in public spending, scaled-down social programs, runaway inflation, a banking crisis, and mounting unemployment and hardship for the poor. The heavily indebted country faced currency devaluation and was forced to seek bailout from the now-infamous International Monetary Fund (IMF) in 1989. The lender imposed austerity that further crippled the economy and worsened everyday life.
Eventually this lead to the rise of Hugo Chávez, a populist demagogue who vowed to bring economic and social justice to the downtrodden, who lead an unsuccessful coup in 1992 and won presidency in 1998. By then, the economy was limping along, as oil prices slumped to just $11, emptying the government coffers. Chavez' brilliance was in mining discontent: he eloquently stirred public opinion against inequality, poverty and corruption of the political elite. For support, he turned to Cuban dictator Fidel Castro, offering oil (over 150,000 barrels/day at discounted prices -- over $1bn in value every year) in return for skilled professionals (brain drain was well underway) and political cover.
After Chavez' passing in 2013, his handpicked successor Nicolás Maduro deeply curtailed economic freedoms and erased all traces of liberalism from the country’s institutions. He expanded Chávez’s practice of jailing or exiling opposition leaders. Other than Cuba, Maduro also deepened alliances with anti-Western regimes, turning to Russia for weapons, cybersecurity, and expertise in oil production; to China for financing and infrastructure; to Belarus for homebuilding; and to Iran for car production.
Fast forward to today: more than three million Venezuelans have fled the country (mostly towards Colombia and Brazil) in search of a better life as its once-robust oil industry collapsed, the bolivar currency loses value due to hyperinflation, and life savings were depleted. Widespread shortage of food and medicines was inevitably followed by an unchecked wave of violent crimes including robberies and kidnappings. In the last five years, real per capita income shrunk by 40% – a peacetime decline that parallels those seen in recent wartime Iraq and Syria. Just this month, the country's electrical grid failed, causing prolonged power and communication blackouts. Fifteen dialysis patients died, and foods went stale due to the heat and lack of refrigeration. Maduro, naturally, blames the blackouts on an "international cyber-attack" by the United States.
Although poverty, corruption and economic crises are quite common in South America’s various republics, Venezuela's sensational decline into a failed state “eclipses anything witnessed in decades”, according to British newspaper The Independent.
So what's really the culprit?
Source: Council of the Americas
Economics of Heavy Oil
Ahmed writes that while failed socialist experiments, corruption and neoliberal capitalism are all implicated in various ways, no one is talking about how the world has shifted into a new era over the last decade or so. From largely drilling cheap, easy crude in the Middle East, we are now dependent on "unconventional" fossil fuels that are much more difficult and expensive to produce. As a result, the highest cost producers have become increasingly unprofitable.
Venezuela's product is categorized as "heavy oil", a highly viscous liquid that requires unconventional techniques to extract and flow, often with heat from steam, and mixing with thinners or lighter forms of crude in the refining process. Heavy oil thus has a higher cost of extraction than normal crude, and a lower market price due to the refining difficulties. This isn't any fault of Venezuelans; it's just a fact of geology. Where Venezuela is at fault, they don't even try to make production efficient: gas byproduct is flared instead of captured, where it can be (and is widely) used for power generation.
When oil prices were at their peaks between 2005-2008, Venezuela was able to weather the inefficiencies and mismanagement in its oil industry due to much higher profits thanks to crude prices of US$$100-150/bbl. At today's US$60-70/bbl, the country's production becomes unprofitable and unsustainable. Adding insult to injury, the Trump administration's August 2017 sanctions severely restricted national oil company PDVSA's access to financing, a difficult problem given Venezuela's highly-levered economy (110% debt-to-GDP). Economist Fransisco Toro wrote that the sanctions made any dealing with Venezuela toxic, and slams the door shut to any Western diplomatic rapprochment to the Maduro regime.
This US policy greatly exacerbated the economic and humanitarian crisis; in fact, former UN rapporteur Alfred de Zayas criticized the US for engaging in “economic warfare”. He declared that “sanctions are killing Venezuelans”, they fall most heavily on the poorest people in society, demonstrably cause death through famine and malnutrition, are aimed at illegally coercing "regime change", and lead to "crimes against humanity" under international law.
Climate Change
Pico Humboldt: 4,940m above sea level
Over the past two decades, Venezuela has experienced severe and persistent drought, including the 2013-16 period when rainfall was lower by 50-65% than the recorded historical average. In 2016 water levels reached within five meters of a dead pool at the Guri Dam, the nation's largest hydroelectric facility (around 70% of the country's electricity is generated by hydropower), causing months of blackouts in and surrounding Caracas. This is caused by the El-Niño Southern Oscillation, the fluctuation in the climate system comprising a cycle of warm and cold sea-surface temperatures in the tropical Pacific Ocean -- a well-documented phenomenon going back to the 17th century -- which has increased in intensity due to climate change. Piled on top of the devastating effects of the country's mismanagement, these shortages adversely affect agricultural output.
The country has also lost, or in the midst of losing, all of its glaciers, including its iconic Pico Humboldt at Merida, threatening an important source of freshwater.
Professor Juan Carlos Sanchez, Nobel laureate for his work with the Intergovernmental Panel on Climate Change (IPCC), says Venezuela is extremely susceptible to climate change because 75% of the population reside along coastal lines and unstable terrains, such as in the Zulia, Miranda, Carabobo and Aragua states. Throughout the 20th century, the average temperature in the country rose by up to 3°C, making these areas vulnerable to rising sea levels. Short-term effects include increasing frequency of extreme weather events, like torrential rains, massive flooding and mudslides, droughts and hurricanes -- all of which we are already witnessing. There are also alarming outbreaks of infectious diseases: vector-borne malaria, Zika, and dengue fever are up 400% over the last decade. However, his long term predictions are ominous:
"Big parts of already-dry Falcon, Sucre, Lara and Zulia states, including the north of the Guajira peninsula, can expect desertification: the permanent degradation of the land and its capacity to carry crops, as a result of insufficient water. The pabellón criollo and even the iconic arepa are at risk: land degradation and decreased rainfall could make it difficult to impossible to grow corn, black beans and plantains in much of the country. In general, water will become scarce in the coming decades as it will rain less over the country – in some regions up to 25% less than what they see today."
Warning to Humanity
When Ahmed underlines the rising cost of oil production, he isn't singling out Latin America. Even in North America, where the energy industry is enjoying a renaissance at the Permian and Bakken fields, most of the companies have yet to show any profits whatsoever. In fact, exploration activities are artificially sustained by the availability of cheap debt and private equity funding; market observers expect the bubble's burst is not so far away.
Of course, the cost cannot just be measured in US$ terms.
When we study the Venezuelan case, we begin to understand the impact of our civilization's addiction to fossil fuels and how it affects the Earth. Very often, city dwellers and policymakers gobble up finite resources, demanding higher and higher amounts of energy in the name of "economic progress" without understanding its source and the toll that society pays to provide it. Some may call it the "resource curse", or "paradox of the plenty". Are renewables the solution? Perhaps, or perhaps not, but at least it's time for the world to study and discuss the science in earnest, instead of stubbornly sticking to one's ideological grounds.
In Venezuela, we are seeing in real-time what happens when mother nature pushes a nation to its breaking point, to the brink of unraveling into a failed state. If I am to offer one prediction: it won't be the last in our lifetime.
The recent World Economic Forum 2019 in Davos brought fame to one Rutger Bregman, a Dutch historian and author on history, economics and politics. In his viral speech about inequality, he told the forum that taxes -- specifically, equitable treatment of taxes and ensuring the rich pays their fair share -- is the only real way to eradicate poverty, while "all the rest is just bullshit".
Around the same time, 2020 presidential hopeful/Harvard law professor Sen. Elizabeth Warren (D-MA) announced her proposal for a wealth tax of 2% on fortunes above US$50mn (and 3% above US$1bn), under a scheme co-formulated by renowned French economist Thomas Piketty, to stop spiraling inequality, curb poverty, and address the balooning sovereign debt problem. This is a novel idea, since tax is typically collected on flows (i.e. income), but not on accumulated assets -- putting the burden on the working class who pays payroll tax and letting those with passive income mostly off the hook.
I'd argue that in what many consider the backwoods area of the Middle East, a certain leader has the same vision.
That leader is Prophet Muhammad (pbuh), who lived in the 6th century AD Arabian peninsula.
Disclaimer: I am not preaching to impose sharia law to anyone. Zakat is a policy that would be suitable for many Muslim countries, but otherwise needs to be voted on by a nation's citizens. Nevertheless, let's take a peek what it prescribes -- there's quite a bit to digest.
What is Zakat?
Zakat, or alms-giving, one of the five pillars of Islam, is a religious obligation for all Muslims who meet the necessary criteria of wealth.
Some texts equate zakat to "tax", but there is an important distinction. Tax in its modern form is a form of government revenue; proceeds are used to fund government spending and capital expenditures. Zakat has purely social functions; according to Islamic doctrine, proceeds are to be paid only to (i) the poor (i.e. no income whatsoever), (ii) the needy (i.e. cannot meet basic needs), (iii) those who collect zakat, (iv) those who are interested in Islam, (v) to free from slavery, (vi) for debt relief, (vii) those in the cause of Allah and (viii) to benefit the stranded traveller.
The amount of zakat is calculated by the amount of wealth one owns. The customary amount is 2.5% p.a. on the assets owned for over one year, in excess of a certain minimum level ("nisab"). According to Majlis Ulema of Singapore, the current level of nisab is approx S$4,900 (US$4,000). Note that it's assets owned for over a year, so if you're living paycheck-to-paycheck, your income is likely not subject to zakat requirements.
If this all rings a bell, this is basically Warren's wealth tax, but that much more inclusive and with a specific emphasis on eradicating poverty and alleviating hardship.
Focus on basic needs
Going back to Bregman, he argues against philanthrophy: sure, the Gates foundation sponsors well-intentioned research to cure HIV and malaria, but for every Bill Gates, there's a Steven Schwarzman who in 2015 "donated" $150m for a new concert hall at Yale, or a Charles Koch spending tens of millions to conservative PACs during every election cycle. Bregman's argument is that for the most cases, philantrophy is misdirected because the rich rarely if ever understands the needs of the less fortunate.
In an article for the Guardian (and told in his TED talk above), Bregman highlights a research by social psychologists showing that poverty affects cognitive function, and makes the argument for universal basic income. He writes as follows, and I quote at length:
"It all started when I accidently stumbled on a paper by a few American psychologists. They had travelled 8,000 miles, to India, to carry out an experiment with sugar cane farmers. These farmers collect about 60% of their annual income all at once, right after the harvest. This means they are relatively poor one part of the year and rich the other. The researchers asked the farmers to do an IQ test before and after the harvest. [...] The farmers scored much worse on the tests before the harvest. The effects of living in poverty, it turns out, correspond to losing 14 points of IQ. That’s comparable to losing a night’s sleep, or the effects of alcoholism.
A few months later I discussed the theory with Eldar Shafir, a professor of behavioural science and public policy at Princeton University and one of the authors of this study. [According to Shafir] people behave differently when they perceive a thing to be scarce. What that thing is doesn’t much matter; whether it’s time, money or food, it all contributes to a “scarcity mentality”. This narrows your focus to your immediate deficiency. The long-term perspective goes out of the window. Poor people aren’t making dumb decisions because they are dumb, but because they’re living in a context in which anyone would make dumb decisions.
Suddenly the reason so many of our anti-poverty programmes don’t work becomes clear. Investments in education, for example, are often completely useless. A recent analysis of studies on the effectiveness of money management training came to the conclusion that it makes almost no difference at all. Poor people might come out wiser, but it’s not enough. As Shafir said: “It’s like teaching someone to swim and then throwing them in a stormy sea.”
So what can be done? Modern economists have a few solutions. We could make the paperwork easier, or send people a text message to remind them of their bills. These “nudges” are hugely popular with modern politicians, because they cost next to nothing. They are a symbol of this era, in which we so often treat the symptoms but ignore the causes."
He notes a Canadian city that experimented with universal basic income in the 1970s, ensuring nobody fell below the poverty line. The results, he says, was a resounding success:
"[...] school performance of children improved substantially. The hospitalisation rate decreased by as much as 8.5%. Domestic violence was also down, as were mental health complaints. And people didn’t quit their jobs – the only ones who worked a little less were new mothers and students, who stayed in school longer.
So here’s what I’ve learned. When it comes to poverty, we should stop pretending to know better than poor people. The great thing about money is that people can use it to buy things they need instead of things self-appointed experts think they need. Imagine how many brilliant would-be entrepreneurs, scientists and writers are now withering away in scarcity. Imagine how much energy and talent we would unleash if we got rid of poverty once and for all."
Wealthiest members of 2018 US Congress - Source: Roll Call
Because politicians have no experience in poverty (e.g. ~50% of US congress comprises of multimillionaires), because of the outsized political influence of the wealthy, today’s populist insurgents are more concerned with immigration than with the top income tax rates, whereas social policies have only touched on the margins. We saw this symptom during the 2018 debate for Affordable Care Act replacement: pundits offered concepts like the "health savings account", which insulted those who can't cope with constantly rising costs. Or in billionaire/commerce secretary Wilbur Ross' insensitive suggestion during the recent government shutdown that furloughed federal workers should "just get a loan".
Basic needs -- money, food, and shelter -- are the things the poor really needs, everything else is just gravy. This is why bringing electricity to the most impoverished town in Rwanda didn't really change lives for the better. On the other hand, food stamps -- one of many social programs politicians dream of cutting -- have been proven to put poor kids on the right path to success in adulthood. In Islam, zakat is payable and distributed only in cash or basic foodstuffs (rice or grains). As only after the fundamentals are fulfilled, can more advanced social programs (e.g. education, public health, entrepreneurship) bring effective and measurable results.
