Economics: Why Are The Swiss Richer Than Almost Everyone Else?

 

(Drivebycuriosity) - Switzerland belongs to the richest countries in the world. The Swiss have a per capita income of $78,000, beating neighbors Germany & France and even the USA by far ( worldbank). This is somewhat surprising. The country doesn´t have oil and other raw materials (commodities) and is mostly covered with mountains which make agriculture very challenging.

I think there are 3 reasons for Switzerland`s wealth:

1. The Swiss have one very valuable resource: Human capital - talented people who are diligent and work hard. What makes them special? The Swiss are the descendants of alpine peasants & herders. These people lived in very harsh conditions and they struggled with an unfriendly environment. Large parts of Switzerland are covered with mountains. Farming is very challenging on steep mountain slopes which are over many months covered with snow.

In order to survive the Swiss had to work extremely hard and to use their meager resources very diligent. The harsh environment forced them to develop high work ethics and talents for craftsmanship & engineering. The evolutionary pressure coerced them to find new income sources and might have lead to today`s craft & industrial art and famous products like the Swiss Army Knife. 

The tiny domestic market forced Swiss companies also to tap foreign markets and to export. The dangers of foreign protectionism were met by increasing specialization, scientific and technical progress, and education (more-intensive occupational training britannica). Today Switzerland is home to global companies like Nestle, ABB (engineering), Holcin (cement) Novartis & Roche (both pharmacy). It is not surprising that Finland & Sweden, which also have an unfortunate economic environment, belong to the wealthiest countries as well.

2. Switzerland has a history of armed neutrality. In the year 1499 Switzerland separated from the German federation, the Holy Roman Empire. The country did not participate in any war since 1815 (history). So the Swiss had enough time to accumulate wealth and they invested their talents into the economy and not into warfare. Switzerland´s peaceful history may be caused by luck but also could be the result of diplomatic skills developed from the Swiss`desire for freedom & neutrality.

3. The believe in self-determination and the emphasis on the rights of individuals created today`s political & economic climate which is liberal and business friendly (the European definition of liberal is different from the American and focuses on the rights of the individual).  Switzerland has a somewhat direct democracy where many political decisions are made by their citizens, who vote in polls, and not by the government (similar to the classical Greek democracies). Recently they voted against a guaranteed basic income for everyone.

The focus on self-determination and the emphasis on the rights of individual created an overwhelmingly private sector economy (few government controlled businesses) with low tax rates & regulations which encourages investment and economic growth. As a result Switzerland ranks at or near the top globally in several metrics of national performance, including government transparency, civil liberties, quality of life, economic competitiveness, and human development (wikipedia). The emphasis on freedom, neutrality & the rights of individuals may also have led the fundamentals for the Swiss banking system.

I think Switzerland is a role model for many countries.  

Culture: Surreal Worlds By Max Ernst @ MoMa New York

(Drivebycuriosity) - Max Ernst belongs to most important artists of the first half of the 20th century and a pioness of surrealism and the Dada movement. New York´s Museum of Modern Art (MoMA) shows now works by Max Ernst, approximately 100 works drawn from the Museum’s collection (through January 1, 2018 exhibitions). I display here my favorites from this exhibition, a very subjective selection as usual.

On top of this post you can see "Woman, Old Man, And Flower" (Paris 1923) followed by "Napoleon in the Wilderness" (1941).

Above: "The Nymph Echo" (Paris 1936),  "Two Children are Threatened" (1924) & "The Blind Swimmer" (1934).

Above "The World is a Story" (Paris 1959)

"To the Rendezvous of Friends" (1928) & "The Origin of the Clock" (1926).

Enjoy!

Stock Market: The War On Business Has Ended

(Drivebycuriosity) - The US stock market is on a tear. The S&P 500, the gauge for the US stock market, gained 15% year-to-date, about twice as much as the long term annual average (driveby). I think this year´s rally has two engines:

1. Strong earnings growth: Companies are now reporting earnings & revenues from the third quarter. The financial information service Zacks reports: "We now have Q3 results from 272 S&P 500 members that combined account for 64.2% of the index's total market capitalization. Total earnings for these companies are up +8.7% from the same period last year on +6.7% higher revenues, with 75.7% beating EPS estimates and 66.2% beating revenue estimates" (nasdaq).

So company earnings are rising almost as fast as the stock prices, keeping valuations reasonable (price-earnings-relations). Why can profits climb so fast in a slow growth economy? Company earnings are rising faster than the national incomes (GDPs) because corporations are getting more efficient & more productive over time - thanks to learning processes and the technological progress. The skeptics underestimate how good leading companies are at squeezing out climbing profits even in a sluggish economy. They are learning organisms because they are managed by humans who are getting better and better over time by continuously improving themselves and their companies.  

2. The political climate in the US has changed and the war on business has ended. The Obama administration had fought a war on business (observer): They raised the top tax rate of every major U.S. tax, except the corporate rate, which was already the highest in the developed world; They imposed draconian regulation on health care, finance and most importantly energy, just when America was emerging with the resources for energy independence to lead the world in production of oil, natural gas and coal and they raised federal spending, deficits and debt to highest in American history by far.

High taxes & regulation reduced the incentive to invest. As a result the US had the slowest recovery after the 2008 recession since World War II and the economy grew much slower than on average - just about 2% annually instead the usual 3-4%. The chart above shows that the US economy expanded slower than the trend and "relative to its previous trend, the US economy is more than $3 trillion smaller than it might have been had things played out this time as they have before" (scottgrannis).

Things are changing now. The Trump administration already stopped the rise of new regulation and started to roll back existing regulation (bloomberg weeklystandard). President Trump is also working on a tax reform with the aim to cut corporation tax rates. De-regulation & tax cuts will  reduce financial burdens and so encourage investing and foster economic growth & company profits.

I believe both engines will keep the stock market rally alive for many months. Enjoy!.

Culture: MoMa - Is Fashion Modern?

(Drivebycuriosity) - New York´s Museum of Modern Art (MoMA) is always worth a visit. Their collections are so huge (200,000 works! moma) that they can just exhibit a small part of them. And they usually have interesting temporary exhibitions. So it makes sense to visit the museum more often - at least when one lives in New York or visits the metropolis from time to time.

This week my wife and I saw a temporary exhibition, called "Items: Is Fashion Modern (through January 28, 2018 exhibitions). They show 2111 items of clothing and accessories that have had a strong impact on the world in the 20th and 21st centuries".

I enjoyed the diversity of shapes and colors. Obviously the audience was quite as interesting as the show. Being an enthusiastic amateur photographer I took the occasion to collect some pictures (with my iPhone 7plus). 

The collection above includes a Jumpsuit Specimen by Richard Malone (2017) and a hooded sweatshirt from Champion (1980).

Unfortunately the images are not online, so I don´t know who created what, but the images look nice, don`t they?



                                                 Fashion Of The Future?

The dolls, called mannequins, are part of the fun. You also can see a wonder bra.

They projected changing images on this mannequins. The fashion of the future?

Enjoy!

Movies: A Ghost Story

(Drivebycuriosity) - What happens in afterlife? Nobody knows, what gives room to a lot speculation. The movie "A Ghost Story" has an interesting take on the afterlife topic (imdb). A man got killed and exists furthermore as a ghost, watching how the world around him is changing.

Director David Lowery, who already had impressed with "Ain`t them Bodies Saints", created another little jewel. The film is very slow and the audience has time to observe the ghost. In the begin I was a bit irritated because the ghost was just someone covered with a white sheet - with two black holes for eyes - like a ghost in a children`s theater. But I got fast used to that and then it made sense. More and more I could see the world with the ghost`s eyes.

The plot follows an interesting philosophical idea but is very plausible & consistent  (which one I don´t tell. This is a spoiler free Blog, but you can find a synopsis here wikipedia). It`s about grief and loss of course,  but also a little bit surprising & humorous. Even though not much happened I was spellbound over the full length of the movie.

The superb cinematography (Andrew Droz Palermo) magnifies the intense of the film by keeping most of the scenes in dark and painting them often in ocher, grey & blue.  I indulged into watching Rooney Mara ("Carol", "Social Network",  "The Girl with the Dragon Tattoo"). Her intensity and the power of eyes give the audience a special experience.

"A Ghost Story" got what it takes to became a classic and a cult movie.

Books: The Year`s Best Science Fiction - 34th Annual Collection By Gardner Dozois

(Drivebycuriosity) - I like science fiction. Unfortunately most science fiction novels disappoint. Therefore I usually skim collections of science fiction short stories in order to find some gems. For many years I have been reading the anthology "The Year`s Best Science Fiction" edited by Gardner Dozois. His compilations have been the market leader for 3 decades and offer a kaleidoscope of plots, ideas and styles. Dozois caters to a lot of different tastes and shows the state of art in science fiction.

I just finished reading his "Thirty-Fourth Annual Collection" which harvests the science fiction year 2016 (the print edition, published in July 2017, has 704 pages amazon). As usual Dozois started with a lengthy summation of important events, trends and publications in the world of science of fiction in 2016. For each story the author wrote an introduction where he outlines the background and most important works of the presented author.

The collection of 39 stories by different authors has something for almost everyone. A lot stories deal with AIs, for me the most important science fiction topic today. My favorite is "Mika Model" by Paolo Bacigalupi. A female sex robot turns herself in. She had murdered her owner, how should the cops deal with that? I also enjoyed"They Have All One Breath" by Karl Bunker. The world is more and more managed by benevolent AIs who seem to have best intention. They use nano technology and other technologies to make everything better, or don´t they? Flight From the Ages" by Derek Künsken is a weird & psychedelic story about AIs, spaceship wormholes & more - post cyber-punk?

Computerviruses are another import topic these days: "RedKing" by Craig Delancey is a cyper-punk thriller about a software designer and virtual game expert who is fighting against the creator of a deadly computer virus set in near-term future.

Dozois covers Genetic Engineering with "Prodigal" by Gord Sellar. A family  owns a genetic engineered dog who became somewhat intelligent. The dog is man`s best friend?

I found also traditional topics of course, like Aliens:"Innumerable Glimmering Lights" by Richard Larson shows us intelligent alien who live in an ocean below the miles of ice. Maybe on one of the icy moons of Jupiter or Saturn? One of them is ambitious and wants to find out what is beyond the ice - causing a lot of trouble. In "Touring with the Alien" by Carolyn Ives Gilman a woman travels together with an alien in a near future USA.

And yes, planet Mars inspires our fantasies for centuries: In "Vortex" by Gregory Benford Chinese & American scientists are exploring the Mars while dealing with a political conflict on earth. The story has lots of scientific insights as usual with Benford.

Space travel didn´t lose its fascination: In "Checkerboard Planet" by Eleanor Arnason human scientists are exploring a strange planet. "The Iron Tactician" by Alastair Reynolds is a baroque fable & space odyssey blended with military science fiction. We read about a scavenger, pilot of a small space ship, who is hunting for a super weapon to fight the attack of superior aliens.

Some stories don`t fit into the traditional categories but are worth reading anyway:  "My Generations Shall Praise" by Samantha Henderson tells about a boy who lives in a strange white room a kind of psychedelic. It`s a speculative story about identity and reality.

My selection is very subjective of course and the rest of the stories may cater different tastes. In the moment of writing the Kindle version of book is priced with $10,99. With this price & quality the compilation is almost unbeatable.

To be continued. 

Contemporary Art: In The Same Tone @ New York`s Art Galleries

(Drivebycuriosity) - New York`s Lower East Side (LES) is infamous for her party scene where bridge & tunnel people carouse all night long. But the district also is a center of art with a cluster of ambitious art galleries. Recently I discovered a newcomer in the scene: Briant Toth Fine Art on 195 Christie Street (bryanttoth ). Currently they show paintings by Matthew Tierney.

I like the blurred and somewhat psychedelic style and his generous use of colors. The paintings show the influence of his career as branding and design consultant for technology start-ups ().

As a bonus I add some images I found @ gallery frosh & portman on 53 Stanton Street (froschportmann). They exhibit works by Hooper Turner, the show is called "Weird". Even that the paintings capture different topics, they are all kept in the same tone. Fascinating.

To be continued.

Stock Market: Sentiment Or Fundamentals?

(Drivebycuriosity) - There is an ongoing discussion about the stock market. Some say stock prices are influenced by psychology and by sentiment, others claim that they reflect the economic fundamentals. Last week we got some new insights.

Thursday October 19th was the 30th anniversary of the stock market crash from 1987, the so-called "Black Monday". On this day the global stock markets suddenly dropped sharply and the Dow Jones tanked 22%. Last week the headlines where littered with Black Monday reminders, especially on Thursday morning. Many commentators warned it could happen again.

Apparently the anniversary - the media obsession with a historical crash -  influenced the sentiment last Thursday, at least temporarily. In the morning hours the US Stock market responded and opened sharply lower -  a tribute to the pessimistic sentiment. But at the end of the day the stock market (SP500) recovered and closed in green (as you can see above). On Friday the rally continued and Dow Jones & S&P 500 closed on  new all time highs. For some hours the stock market was ruled by the sentiment and psychology but at the end of the day the fundamentals won over.

 Skeptics might call last week`s stock market performance complacent but crashes are rare. In the history of the Dow Jones (founded 1896) there were just 4 events with a daily loss of more than 10% (wikipedia). 4 massive crashes in 119 years - that gives them a very low probability! And 3 of them happened before Word War II.

The recent stock market highs are a response to the positive economic fundamentals: Growing global economy, rising company earnings and an US tax reform in the making. Fundamentals rule!