Global Thoughts 7 June 2018

Isn’t it a bit weird that you can take a gun to school but you can’t bring food that was made in a facility that uses nuts? Another question: Why do some states spend $9,000 per year per student on education and $24,000 per year per prison inmate on incarceration?

I read about a US court that recently ordered a 30-year old person to leave his parent’s house. Something to look forward to, huh?

From Donald Boudreaux oped piece in the NY Times “Trade is not the Real Job Killer” comes some interesting analysis about job creation and loss. The author quotes two articles about jobs lost to trade. One says that trade with China destroyed 2.4 million jobs over a 12-year period. Another says that 1 million jobs were lost to NAFTA over a 20-year period. These are the major points that Trump makes about the imbalance of trade. The author writes that each year 21 million American workers are laid off or dismissed and that even if all the jobs cited in the articles were lost to trade as the other articles assert, this is not where the action is. Job creation in America is much more responsive to changing consumer tastes and technological innovation. ATM’s and online banking apps are eliminating jobs for bank tellers; home deliveries and kiosks are helping to axe cashiers in supermarkets and pharmacies. We’re buying less cigarettes and more exercise gear, and you can see jobs go where the money goes. The author’s basic point is that competition and innovation are good for America, which has the highest number of jobs now that it ever had, and that earnings for Americans are at a historic high. Getting into a trade war will save only a few jobs and will stifle the engine that makes America great overall.

Think about this: All 4 of South Korea’s living ex-presidents have now either been convicted of corruption offenses or are in jail being tried or investigated for such crimes.

Some criminal was caught at a concert attended by 60,000 people through facial recognition technology employed at the stadium in China. This is a big deal; it is a victory for law enforcement and gives you an idea of how powerful these systems will be. China is building a massive CCTV system in its country; it will be very hard to escape detection if you are considered a baddy in that country.

I went to a town hall meeting last month. It was the first time in 20 years that I’ve lived in NY City that I went to one. I won’t be going to any more. I think that I might pay more city and state taxes than the entire room put together (after all, people who have work to do and lives to lead generally don’t go to town halls) and of course I wasn’t called on and instead sat for 2 hours hearing all sorts of cranks say their piece. The meeting was about bus and subway service with the new head of the transit agency. He said that if the City continued at its current pace, it would take 40 years to bring the subway and bus system up to today’s standard, which probably won’t help in 40 years if people get around in flying machines. However, with good funding and people’s cooperation through times of great inconvenience, he allowed that the job could get done in as little as 10 years! The general idea here is that if you need to get anywhere, you either take the subway or walk. Taking a car, taxi or bus is generally a waste of time and money. This week I had to go to a doctor’s appointment. After giving up on the bus, I got into a taxi. I wound up leaving the taxi and walking the last 15 blocks and being 15 minutes late. Same deal on the way back. The city doesn’t work at the current rate of things and the state legislature refuses to allow congestion pricing in New York City, which is how other world capitals have coped with streets that don’t move. That aside, there are plenty of things they could do here without getting state legislative approval (you’d be surprised but many things that go on in NY City are regulated at state level harking back to the time when NY City went bankrupt in the 70’s and the state took over much of its infrastructure and has never let go since). For instance, they could eliminate free parking for cars all over the streets, force truck deliveries to happen during off-hours, move construction projects on the streets to off hours, and have some short-distance shuttles move people along main streets. They could also move street fairs and parades to side streets that don’t block traffic on major avenues.

Here’s a consumer tip: If you keep cash in the bank, you’ve noticed that you get paid hardly anything for it, as in maybe half a percent interest. But there are a number of places you can keep cash on a liquid basis that will pay you 2% interest these days. These are basically overnight money market accounts. Fidelity and Oppenheimer have one for their customers; one that you can online is ticker symbol PCOXX which is offered by Federated Investments. You can just buy and sell at will and these are highly rated funds that are generally considered safe investments.

You’d think that with all the bad publicity with Facebook, its shares would be down, but in fact just as I write this, they hit an all-time high. As a shareholder, I’m quite happy but as a citizen, I’m concerned that companies such as Google, Amazon and Facebook are becoming so large they are stifling competition and innovation. Companies are losing their incentive to grow; they just want to startup and then wait to be bought because they are told that if they refuse the buyout, they will be gobbled up by a copycat produced by one of the large companies. These companies know so much about everyone that they can tell before anyone else who is doing what in any sphere of business. There is plenty of evidence that they are not trying hard enough to make good on their promises to stop abuse of information they control. Amazon competes against its own customers and partners in a way that I think is not healthy or ethical. A generation ago AT&T was broken up and at that time it was considered a huge monopoly. It was small compared to these companies. I assume that in a few years a Democratic administration will become more aggressive on this anti-trust issue. America as a whole is becoming less competitive because we are being reduced to a few leading companies in each industry that control those industries. When the airline industry was regulated, we had something like 50 airlines. Now, under so-called de-regulation, the US has 3 big airlines now and a few small ones serving niche markets. They do stuff that completely annoys people because a market with 3 players can set just about any rules they want, and nothing is being done about it because the regulators in DC are in bed with those they regulate.

MBS of Saudi Arabia took a big gamble last year that if he reduced supply, oil prices would go back up. People really poo-pooed him. It seems like he won. Give the guy credit. He’s pretty popular inside his kingdom doing stuff that the younger generation likes.

Elizabeth in Amsterdam

Did you know that, according to a front page NY Times story, somewhere between 1 billion and 2.5 billion people need eyeglasses? The developing world is filled with such people and it only costs about $1 a pair of glasses. Nevertheless, only about $37 million a year gets spent on providing eye care in poor countries, less than 1% of the total spent on health care in the developing world. Big donors such as Bill Gates reportedly think it is more sexy to try and get rid of malaria, but I did the math and found that roughly a quarter of one percent of people who have malaria die from it. You could do a ton for people by getting them eye glasses. Without them it’s hard to see in school, drive a car, pick fruit on a farm, choose which can of chemicals is the correct one. A significant portion of the roughly 200,000 people who die in road deaths in India each year had accidents stemming from poor eyesight. The lost productivity due to poor eyesight is $200 billion a year. Until last year, there wasn’t a single functioning eye clinic in all of Liberia, a country of close to 5 million people. If you figure it costs $1 a person to put on a pair of glasses and there are a billion people out there, a billion dollars would make a billion people’s lives a whole lot better. People buy companies for a billion dollars like it’s nothing — don’t you think the world ought to do something about this? Spend another $50 million putting up a few hundred eye clinics and voila!

The nonstory behind the Gaza protests taking place is the million people who are staying home and not participating. Palestinians are truly fed up with their leadership both in the West Bank and Gaza and they are not seeing any future for themselves, especially the younger generation. 25 years ago my friend Oded said to me that long-term autonomy was going to be the solution for this problem and as I watch things go from decade to decade I think he’s right. I think that the Palestinians ought to give up on statehood not because the Israelis will or will not allow for it, but because you look all over the Arab World and there is not a single country within it that offers young people the same opportunity as Israel does for its people. Israel is a democratic country where people have rights. Just like Blacks in America function as citizens with rights that are often not respected, so do Israeli Arabs. In neither place is it perfect and the perfect unattainable solution is to bring around the majority to respect its minority, and for the minority to behave itself and not give the majority reasons to feel threatened by it. But at the end of the day, both groups have rights to property and citizenship that cannot be taken away willy nilly like they can elsewhere in the Arab World. You can live in the Emirates for 25 years as a Palestinian and be kicked out on a day’s notice so all your life you never really get to build something and call it your own.  I think that if I were a Palestinian youth, even though I’ve been conditioned to hate Jewish Israelis, my best future prospects would be to live in a territory controlled by Israel and to make it clear that I want to live my life and that I am not interested in threatening Israel. In return, I expect Israel to invest or allow investment in my territory, provide leadership that will not be corrupt, give me a decent bundle of rights that will be respected by law, and to treat me with respect. There must be some clever way to give Palestinian rights in an autonomous territory that governs itself without making them citizens of Israel and setting off the demographic time bomb that scares Israelis. The problem for Palestine is that until now it has been used by outsiders such as Iran to stir the pot, just like Lebanon has been. The citizens themselves know they are being used and hate it. Is there hope for the future now that Abbas is at the end of the road with no obvious replacement in sight and Hamas has made Gaza into a human cesspool? Maybe.

I think about this some more and I think that the way out for the Palestinians is for the younger generation to get out in the streets and protest AGAINST their leadership. Say we’ve had enough, we don’t want anymore, and we want peace with the Israelis. This would impress the Israelis more than anything their leaders could say. Till now the people in the street get out there and try to either get the world to turn against Israel or they demonstrate that they are going to proclaim jihad and liberate Palestine against the Israelis. It’s just not going to happen and the Israelis are prepared to sit there for another 70 years with these guys demonstrating and seeking martyrdom on their borders. But we all know it is to a great degree a rent-a-crowd (when bus drivers say they are physically threatened by the leadership if they don’t drive the buses to the rallies, that’s one version of a rent-a-crowd), and that the people who live there are afraid, especially in Gaza where they can’t speak their mind. The only way this territory is not going to remain a cudgel for outsiders such as Iran is for the people to make it clear publicly that they want a peaceful state and that they want their own leadership to either fall in line or get out of their way. I know that sounds completely naïve and ridiculous, but if you play all this out, it’s the only card that I think will work. Even if they don’t say it, you can just see that it really is happening because of the people who all stayed home, which is where I started this discussion.

In my cold-hearted analysis, Israel did a masterful job of dealing with Gaza and Syria these past couple weeks. They struck hard at Syria and the day before Netanyahu spent the entire day with Putin in Moscow being very chummy for the public to see and clearly agreeing with Putin as to where the strikes would be directed. The world knows that right now Russia more than the US is the power in Syria, and it is not being lost on the Iranians and Syrians that Russia and Israel are not about to let Iran take over Syria. After the drubbing they got, it’s quiet now in Syria. Hezbullah, which just came out in front in the Lebanese elections, is now on the inside responsible for that country, and a war with Israel which destroys the country’s economy especially going into the summer tourist season (which is at this point most of that country’s economy) is not going to help them. They still regret what they instigated a decade ago with the Israelis. The Arab press and reportedly a good number of people inside Iran made it clear that they thought the Iranians were humiliated by the Israelis who bombed their butts clean, in the process killing a dozens of officers, and destroying millions of dollars of armaments while Iranians see their economy totally going to pot and the Europeans joining the American sanctions because their trade with the US is 100x that of their trade with Iran.  Trump is making it clear that he stands with the Israelis, and the Europeans have nowhere else to go and no leverage to interfere.

On the southern side, the Israelis made it clear before and during the demonstrations that they were not going to put up with any crap on their border and they did not want to create a precedent for having people cross the border and have to deal with them on the Israeli side with civilian areas only a few hundred meters from the border. The number of casualties in that kind of scenario would be exponentially higher. So they played it very tough – tough enough that most of the 60 people who died along the border were – even in Hamas’s own words – members of Hamas and a good deal of them were militants carrying more explosives and weapons than were immediately apparent.  This tells you, just like I mentioned elsewhere in this posting, that most normal people in Gaza did not want to be part of this border demonstration, and they certainly did not want to do it after that day’s events. Most of the civilians that went there did so after they heard messages on loudspeakers stating that the border had already been breached only to find out they had been lied to. Word certainly came back to their brethren that this was a bad risk and the next day which was supposed to be the climax of it all turned out to be below normal activity. The Israelis took the opportunity in the chaos and diversion of Hamas resources to the border, to bomb Hamas military installations across Gaza. The Egyptians told Hamas leaders within a day that if they continued their protests, the Egyptians would not help them no matter what the Israelis did to them in retaliation. In my opinion, this tough love from Egypt plus the Israelis’ hard-ass position got the Gaza stuff to stop real fast. The Qataris and Egyptians are trying to help Hamas save face by dangling some economic aid for the Gaza strip. The Israelis prefer quiet borders. I think that because of all of the above ultimately a lot fewer people are going to get hurt this summer both in Syria and in Gaza because of it.

On one level, I think that Trump is a disaster. On another, he might somehow be the right man at the right time. If you watch Bibi Netanyahu’s speech on April 30 showing how Iran has consistently lied about their nuclear program (it’s one of the all-time top theatrical public intelligence presentations and everyone should watch it), you need two bad-asses to take them on, and Obama was not the one to do it. Iran is trying to take over the Middle East and has the Sunni world on the run throughout the region to the point that they thank God every day that Netanyahu is in their corner on this one because no one else in the world cares nearly as much about this problem and is willing to send the air force over the border with 200 bombs in one night and send the Mossad into the heart of Teheran to come back with half a ton of top secret documents that few even in the Iranian leadership knew about. What else is Iran going to do with nuclear weapons on missiles they are now developing that can reach far beyond the Middle East?  They already have enough missiles to reach anywhere in their region, so what are they up to anyway? Europe is going to be in the way at some point. They may not see it now, but it Western Europe is clearly within the sites of Iranian leaders and I’ve been pointing this out for at least 5 years on this website because I know that taxi drivers in Europe are aware of this and have been telling me so. This is a serious issue for the world, as is North Korea. If Trump manages to get the Iranian and Korean situations under control, he will have succeeded in making the world a better place, despite having a bunch of wackos around him in cabinet positions when it comes to domestic issues. Presidents mainly matter in foreign policy anyway. The bureaucracies will hold out and in a few years he will probably be gone. So will Bibi probably. But meanwhile there is serious work to be done and the sages of old wrote that the Messiah will not exactly be wearing a tuxedo and look like Prince Charming on a white horse, meaning that if you see some drunk guy on the sidewalk you shouldn’t count him out either as the possible Messiah. Meaning you just never know where your redeemer might come from. One thing that he will be remembered for, long after he’s gone, in the pantheon of shameful behavior, is how the US has been breaking up families and tearing children from their parents at the borders. It’s a real low point in our respect for human rights and, though it probably deters people from trying to cross the border, it’s probably just creating more messed up children who will cause more trouble later on.

The Economist has an interesting survey on Chinese people in the world. One of the group of 7 that runs the country is western educated, and 3 of the 24 politburo members is western educated. Even though there is much for the Chinese to criticize about the West, the influence of Western university education is making its way into the country’s leadership and its results can be expected within a generation.  

Here’s a great example of how you never know what will happen in history when you make assumptions about the future. The BBC reports that a Canadian company backed by Bill Gates announced a peer-reviewed study proving that it can now remove carbon dioxide from the air for under $100 a ton; the previous cost had been $600 a ton. The price would presumably come down even further if this advance stirred more research and development. Global Warming debate focuses on how to put less CO2 into the air; this is a new tack focused on removing it from the atmosphere.

I’ve published a companion piece this month on my great aunt Fay at 105. You’d want to read this article to join me in thinking about how our system deals with the final years of life and whether our concept of death with dignity is in reality torture for both the dead and the living, for all the wrong reasons.

Hope you have a great summer!



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