Economics: Why Everyone - Even Americans - Benefits A Lot From China`s Rise

 (Drivebycuriosity) - China is reawakening. The country had once been a superpower and the most progressive and innovative civilization in the world. The Chinese invented paper, the compass, book printing, gun powder, pasta (noodles) & many other things  (ByronWien wikipedia).  Now they are coming back - and very fast. Many Americans respond negative to China`s rise, some even hostile. They are envy & distrustful - maybe even scared. The Trump government started a trade war to fight China´s ascent, unfortunately the Biden administration continues Trump`s anti-China policy.

The China haters are mistaken. The whole world benefits from China`s rise - even the Americans. China has about 1.4 billion people, four times as many as the United States. More people means that there are more creative minds with new ideas. Thanks to the sheer size there are potentially about 4-times (compared to the US) as many artists, entrepreneurs, inventors, scientists and geniuses like Elon Musk or Bill Gates. 

The whole world benefits from China`s huge number of intelligent people who are highly educated and are hard working. China`s 1.4 billion people are the base for innovations which will fuel the growth of the global economy and raise living standards worldwide. China`s large number of scientists & entrepreneurs will boost the global progress of medicine, robotics, artificial intelligence - and so the standard of living everywhere. 

The Chinese education system is more rigorous, competitive and success focused than the American and the British (americanaffairs ). Wikipedia counted in 2014 already "2,236 colleges and universities, with over 20 million students enrolled in mainland China" (wikipedia). Fast expanding knowledge is driving science & innovation and fostering economic growth (washingtonpost). Chinese corporations, think tanks & administrations can employ a large number of highly dedicated & educated people (human capital) - a strong driver of economic growth (scottsumner). 

China is already a success story. Over the last 5 decades Beijing - communist or not - lifted more than a billion of people out of poverty.  Beijing has a very long-range plan for infrastructure investments, including bullet trains & 5G networks, whereas western countries can't see beyond the next election.

In spite of being officially a communist country China is becoming more capitalistic. The country has already more than 1,000 billionaires ( yahoo).  There are more than 3,000 Chinese companies listed on China`s stock markets and huge publicly noted technology companies like Alibaba, Tencent & Baidu became the engines of economic growth and technological progress (scmp.com). Rainier Zitelmann, a German historian and author, quotes a leader of a private Chinese think tank who is bemused that socialist ideas are experiencing a renaissance in Europe and the United States: “Here in China, hardly anyone still believes in Karl Marx’s ideas.”( fee.org). Elon Musk recently criticized the “entitled” and “complacent” character of people in the United States, and lauded the “smart” and “hard working people” of China ( cnbc ). 

China´s transformation from the work bank of the world into a modern service based economy is fueled by the technological progress: Rapid advances in software & Internet (including cloud computing), AIs, robotics, 3D printing, nanotechnology, genetic engineering and other technologies are all lifting the productivity of the economy (byronwien). Recently China landed a rover on Mars (nature.com ).

China`s growth is fostering the global economy. During the 2008 recession China´s GDP still grew 10% and during the Covid-19 pandemic the country again avoided a recession and advanced 2% in 2020. In both years China´s perpetual growth cushioned the fall of the global economy. The 1.4 billion Chinese consumers, who`s incomes and purchasing power are rising fast, are a growing market for global brands, including Apple, Starbucks, McDonald`s, Tesla, creating climbing incomes in Europe & America. Since 2020 China is already the largest trading partner of the European Union (spiegel.de/ )

The world, including the Americans, also benefits from China`s exports. Imports from China, including apparel, hardware and toys, are reducing the cost of living in the US and other countries. And they make many things more affordable, including smartphones, laptops and other electronics. These cost savings allow low income groups to spend more money for other goods and services - they gain more  quality of life. Money which isn´t spend for apparel, hardware & Co (because of the lower prices) will be spend for domestic goods & services (like dining out and traveling) and will create new jobs in the US - compensating the job losses at least partly.

Free Trade with China - and with the rest of the world - also creates a healthy competition. As long the US producers are protected by trade restrictions, they behave like monopolists - more or less. Missing competition from China allows them to hike prices and reduce the quality of their products (lower quality means lower productions costs = higher profits). A return to free trade with China would not only imply lower prices, it would also yields a higher quality and more variety. And the competition with China forces the US industry to become more efficient & productive. 

China has a huge trade surplus meaning that the country sells more goods to the US than it buys from there. As a result China is amassing trillions of dollars which it uses  to purchase US government bonds ( investopedia).  So the Chinese are financing the US public deficit and indirectly the US public spending. Without the Chinese bonds purchases the US government would have to pay higher interest rates and maybe reduce the public spending which could cost US jobs.

China will overtake the US rather sooner than later but we can learn from history that Americans wouldn`t be hurt. Great Britain had been once the global power No. 1, but today it is just a small island nation. Nevertheless the living standard of the British didn`t fall, quite the opposite. Like the British benefited from America`s rise over the recent 150 years, everyone - even the Americans - will benefit from China`s rise. So, everyone, even the Americans, should embrace China`s ascent.

Culture: Happy Birthday Bob Dylan

  (Drivebycuriosity) - Today the world - at least the part which cares about culture - is celebrating Bob Dylan `s birthday. On May 24, 1941 Robert Zimmerman was born. I saw him twice, 2013 open-air in Hoboken, New Jersey and 2019 July 12 at his Hyde Park concert (plus Neil Young). At his Hyde Park gig he was in party mood and "Like a Rolling Stone" came as a dance song. London had then also an exhibition with some of his paintings (I chose 3 for illustration). 

 

 

Dylan was a kind of chameleon. He often changed style, attitude and maybe even opinions. Tod Haynes`movie "I`m Not There" gives an impression of his chatoyant personality (imdb ). The master did not appear himself, instead he was incarnated by several actors who represented different epochs of his early life. For instance Kate Blanchett personified a psychedelic London episode and Richard Gere appeared in a 19th century Woodstock setting. The 1967 American documentary film "Don`t look back" directed by D. A. Pennebaker that covers Bob Dylan's 1965 concert tour in England shows the original prodigy, who looked like an angel.

 

I wasn`t surprised when they gave Dylan the Nobel Prize for Literature. I love his dry wit and sarcastic humor ("They are sending post cards from the hanging"/Dissolation Road). His songs got (felt) millions of cover versions.  Jimi Hendrix`s version of "All over the Watch Tower" still belongs to the canon of rock music. Dylan certainly shaped today`s culture.

Happy birthday Bob!

Urbanism: Comparing Miami With New York City

 (Drivebycuriosity) - Recently I visited Miami, the second time since December 2017. The visit inspired me to compare Florida`s metropolis with New York City, where I live. The first difference is obviously the climate. Miami is a city of light - just 162 miles (260 km) north of the the tropics. The tropical sun immerses the city in soft pastel tones. I also enjoyed there temperatures in the high 70s (20+ C) and the almost tropical vegetation. They are growing coconut trees there. When I came back to New York - early May - the quicksilver column stayed at 52 F (11 C ).

 

Miami is very modern, classy and cool (even though it can be hot there). I spotted many new office towers and condominium palaces and the city looks fresh & neat. In contrast New York is old and dirty. The streets in my Lower East Side neighborhood are rotten, spoiled with holes, and dangerous to walk.

 

 

Miami has a lush tropical vegetation which is shaping the face of the city. The metropolis looks like a garden city, making her more livable than New York City.

 

 

 

Miami is still a boom town. I noticed lots of construction, more than in Big Apple. It seems that climate, relatively low taxes and a southern life style (partly by the Latino influences) are attracting a lot of new residents. Apparently the newcomers aren`t scared by rising sea levels and hurricanes (even New York gets hurricanes. They are still repairing damages by Hurricane Sandy from 2012).

 

Going out is more fun in Miami because the climate allows more outdoor activities. I got the impression that Miami has a more attractive restaurant scene than Manhattan. There are more fancy Asian & Peruvian + (blend of Japanese & Latin American cuisine) places per square mile than in Manhattan. My wife and I were lucky to get a outdoor table at Komodo (just made a reservation the day before). This is a highly popular & fancy place, which also offers an excellent Asian cuisine. 

In contrast New York´s restaurant industry is troubled. Extremely high rents and uncooperative landlords are driving many chefs out of business. New York`s restaurant crisis got worse in the recent months. Unfortunately some of the better place didn`t make it through the pandemic. They depend on foreign tourists and business customers, both stayed away during the crisis. But the tiny fast food dives in my Lower East Side are booming, fueled by the generous government checks. When the tourists come back to New York, they might not like what they will find.

 

Walking in Miami is fun, less so in New York. The streets in my south Manhattan neighborhood Lower East Side are filled with beggars, some of them aggressive. The neighborhood blog Bowery Boogie reports about frequent mugging, stabbing and shooting on the streets and subway stations ( boweryboogie.       boweryboogie ). And New York`s beaches (Rockaway, Coney Island) are slums and spoiled by a ridiculous amusement park.

Miami is hipper than New York!

Books: The Pale Criminal By Philip Kerr

 (Drivebycuriosity) - The serial killer genre is huge and still growing. There are more and more books & movies about these creepy persons. The British writer Philip Kerr offers in his novel "The Pale Criminal" his own version (amazon ). 

The plot is set in Berlin in the late 1930s, short before WWII begins. A private investigator returns to his job as a police officer and investigates the cases of a row of under aged girls who have been abducted, raped, tortured and murdered. 

The story is spiced with grizzly details, but also humorous musings about Berlin, her residents and politics. Kerr especially made fun of Hitler, the Gestapo, SS, SA and other bad parts of Germany`s dark history. It seems the author was more interested in the bleak history than in the serial killer aspect. The book, part of a series, got onto my radar because I enjoyed once Kerr´s "Philosophical Investigation", a very different and much better book.

 

 

Economics: Waiving The Covid-19 Vaccine Patents Would Be Moronic

 (Drivebycuriosity) - The Biden administration is considering to waive the patents for the Covid-19 vaccines. These patents create temporary monopolies. No one else can use the same formula without paying a license fee. The vaccine patents protect the vaccine creators and allow them to make profits to recover the costs of creating these patents. Similar intellectual property protections are very common, they exist for example in the publishing industry, no one else can publish a Grisham or a Harry Potter novel or a text book without paying the publisher (which explains the high prices for text books). The songs by Kanye West and million other music creators are also protected. 

Waiving the patents for vaccines would do more harm than good. At the begin of the Covid-19 pandemic (March 2020) the Wall Street Journal reported that  "no fewer than 30 Big Pharma and small biotech firms are racing for treatments and vaccines" (  marginalrevolution  wsj). All these companies spend a lot of money, but only a fraction of them succeeded. Today only four vaccines are permitted in the US, Great Britain and the European Union: Moderna, Pfizer/Biontech, Johnson & Johnson and Astra Zenecca. The rest lost money, a lot.

Creating - and investing in new pharmacies - is a lottery. Developing new vaccines cost many millions and they have to survive through a row of clinical tests. Most projects get abandoned. They don`t get approval by the regulators because the vaccines were not effective enough or/and had severe side effects.

Waiving the patents would punish those who succeeded and who gave us the vaccines. Wouldn`t this not be very ungrateful? The vaccines by Moderna & Co. are saving the lives of hundreds of thousands and are sparing many more an enormous amount of agony. And everyone else also benefits from the vaccines. Since my wife and I got vaccinated - thanks to Moderna - we got our lives back. Now we can walk on the streets, go shopping, dine out and travel again without the fear to get infected. 

The vaccines are ending the lockdowns and quarantines in the US and Europe. They save the economy because they make it possible that businesses reopen without causing a new wave of infection. In the US many shops & restaurants are already flourishing again. The swift economic recovery in the US - made possible by the vaccines by Moderna, Pfizer-Biontech and Johnson & Johnson - is worth trillions of dollars. COVID-19 vaccines are the only path to ending the pandemic, and their value must be measured against the pandemic’s costs (cei.org) . The cost of efforts to slow the pandemic in the U.S. via a nationwide shutdown of “nonessential” economic activities approach S7 trillion per year (roughly $20 billion per day), even without accounting for medical expenditures and valuation of lives lost (roughly a $2.5 trillion valuation of the 580,000 deaths so far  chicagobooth.edu).

If the Biden Administration would waive the patents they would reduce the incentive to create new vaccines. Why should anyone invest into new expensive vaccine projects - with the high risk to fail in the clinical trial process - when even successful vaccines would not return enough profit to recover the cost? 

Waiving the patents would especially harm Moderna, Pfizer partner Biontech and other biotech firms who developed vaccines based on the mRNA technology. They already advancing the new technology to fight more diseases, including cancer, AIDs and the flu, which would save many lives in the future. This leads to a lot of research and causes new costly trials of course. Why would the biotech companies invest so much money when Biden waivers their patents?  Waiving their patents could even ruin the biotech industry which gives us the valuable vaccines ( spiegel).

Waiving the patents would slow down pharmaceutical innovation. Pharma and biotech firm would invest much less into new projects. Therefore fewer new vaccines would be created in future - if any. The lack of vaccines and other medicines in the future may kill millions of people in the future. And there might be no more vaccines against a new pandemic. Waving the patents would be moronic!  

Science Fiction: The Doomsday Book By Connie Wilson

 (Drivebycuriosity) -  I like to read science fiction and also historical novels. "The Doomsday Book" by Connie Wilson is both. I had read the novel once in German translation, now I consumed the original version on my Kindle ( amazon). 

The plot: The University of Oxford has a history department. Their historians travel back in time to research a certain time period. A young woman is sent into the 14th century to a place close to Oxford. Unfortunately some things don´t work out as expected (this is a spoiler free blog). 

There are 2 parallel running story lines: Events in Oxford (in a near future, when people can travel in time) and the experiences of the time traveler in the 14th century. The book stretches about 600 pages. 

Unfortunately the Oxford parts are way too long and contain too many fillers. Some parts read like written for young adults. But the medieval part - the real Doomsday Book - is well researched. The blot gets very dark & emotional and turns into a bleak horror story. I got sucked into the 14th century events, but I was just browsing through the almost unreadable Oxford chapters. The book would have needed a good editor. 

Contemporary Art: Narrative Figuration @ Richard Taittinger Gallery

(Drivebycuriosity) -Normality is coming back, thanks to Moderna and others vaccines. My wife and I are visiting art galleries and pubs again. This week I took a look into Richard Taittinger Gallery on Manhattan`s Lower East Side. The art dealer has a group exhibition called Narrative Figuration 60s - 70s (richardtaittinger ). As the name says I could see work from different artists created in  the 1960s to 1970s.

 

  

I display here my favorites, a subjective selection as usual. On top of this post you can see an image by Gérard Fromanger (French b. 1939) created in 1964 followed by images by Erró (Icelandic b. 1932).

 

Above this paragraph an image by Eduardo Arroyo (Spanish 1937-2018)

 

Above work by Cybèle Varela (Brazilian b. 1943)

 

 

Above work by Jacques Monory (French 1924-2018)

 

 

Above an image by Valerio Adami (Italian b. 1935)

 

 

 

 

Above more work by Gérard Fromanger .

 

To be continued


 

Traveling: Impressions From Fort Lauderdale

 (Drivebycuriosity) - My wife and I are back from our Florida vaccination. After Miami and Key West we stayed 3 nights in Fort Lauderdale. It seems the city is the poor little sister of Miami, which is just 28 miles (45 km) south. FL doesn`t have the class and the coolness of Miami. Everything looks cheaper there.

There are of course the usual skyscrapers in the center, but just a few, surrounded by the usual sprawl. The city is infamous for being the mecca of spring breakers and even though we stayed there late April and begin of May we could observe & hear lots of them. But fortunately the usual fleet of cruise ships wasn`t there, thanks to the Covid-19 restrictions. The city has many condominium towers catering people who are attracted by Florida´s beaches, climate and relatively low taxes - and FL is more affordable than her classy sister.

I spotted there some brutal architecture but also some some better buildings.

 

FL is not a mecca of art but I noticed some street art. 

We didn`t find any attractive restaurants or pubs in downtown were we stayed. Maybe the spring breakers and Fort Lauderdale`s condo owners don´t care much about fine cuisine. One place - which looked acceptable online - was  occupied outdoors by a loud group of beer drinkers who smoked smelly cigars. So we skipped our reservation tbere and took the flight to another place.

 

But FL has also some positive sites. I enjoyed the lush vegetation which benefits from the almost tropical climate.

 

A river is snaking through the center which invites for a walk along and there are many canals parallel to the water front. Parts of the city look like a tropical Amsterdam. Apparently the well off have their residences along the waterways, away from the party crowd.

 

To be continued

Covid-19: Why Great Britain’s Vaccination Campaign Is Far Ahead Of The Rest Of Europe

(Drivebycuriosity) - The world is vaccinating against Covid-19. Great Britain is far ahead of the rest of Europe. More than 50% of the British received already the first dose (chart above source ). The swift vaccination is reducing the number of persons who could get infected and breaks many infection chains. The rapid progress saves lives as the falling numbers of new infections, hospital admissions & deaths show.

 

(source  source)

 

Why are the UK ahead of other nations? There are 2 reasons: 

1. The UK had a head start. The Brits were the first in the world to give the green light to a clinically-approved Covid-19 vaccine, on Dec. 2 ( qz.com). In December the European Medicines Agency (EMA), which is in charge of approving COVID-19 vaccines for the EU, said its longer approval procedure was more appropriate as it was based on more evidence and required more checks than the emergency procedure chosen by the UK (aljazeera ). The EMA’s comments came hours after the UK became the first country in the world to approve the drug developed by Pfizer and BioNTech for use.

 The Brits were not only faster than the rest of the world, they also negotiated contracts which encouraged the production of the life-saving vaccine. While the anti-capitalist European Commission, responsible for the common European politics, made sure that the pharma corporations did not make profits with the vaccines, were the Brits more generous, which encouraged the vaccine creators to produce more and faster ( spiegel.de  marginalrevolution).  "The pattern of Britain investing aggressively and early while the EU takes a slower, more cautious approach has been the hallmark of the vaccine race in Europe", wrote AP ( apnews). And the magazine Politico comments: "The contract - the vaccine producers - sealed with London was written by people with significant experience of purchasing agreements, specifically drug-buying deals. The European Commission’s contract, by contrast, shows a lack of commercial common sense, in the lawyer’s view" (politico ).

2. Great Britain chose a first-dose-first (FDF) strategy. While the US and the EU countries follow the original recommendations by the vaccine producers and try to give the recipients 2 doses in a short time (21 days for Pfizer, 28 days for Moderna) the British delay the second dose about 3 months which allowed them to vaccinate twice the number of people in a short time.

New findings support the British strategy. It turned out that AstraZeneca works better when the second dose is injected after three months (not just after four weeks as originally recommended spiegel.de). According to AstraZeneca a longer waiting time raises the efficacy by 80% (papers ). Other studies show that the first doses from Moderna or Pfizer are already 80% effective after around 2 weeks ( cnbc).

The success on the vaccination front allows the British government to lift the lockdowns and to reopen the economy swiftly, faster than her European neighbors  (bbc ).