1. On reshoring and localisation of production,
Large companies that can afford to own more of their entire supply chain have been moving towards vertical integration as a way to smooth disruptions and the inflationary pressures that result. Companies of all sizes are looking for ways to localise more production wherever their consumers are, no matter which country or region they are in. Many smaller “maker” firms in New York have benefited during the pandemic since they source locally, but the technique is also being picked up by big name brands that simply want more buffers against shocks of any kind — be they geopolitical or climate-related.
2. Russia and Ukraine's exports of cereals and commodities,
India as a whole is said to have 140 dollar-billionaires. According to Credit Suisse, there were 764,000 dollar-millionaires in India in 2019, i.e. those with wealth of Rs 7.5 crore and more... And in the same 2019, all of 316,000 filed tax returns declaring income of over $70,000 (or Rs 50 lakh)... Again, there is no central data point, but checks with companies in the business suggest annual purchases and bookings of fewer than 3,000 residential properties that are individually worth Rs 5 crore and more. Even if one were to lower somewhat the bar for unit value, the number of transactions would remain decidedly modest in relation to the reported numbers of millionaires... Sales for the top three German luxury-car makers peaked at 32,500 in 2017 and have fallen since. In 2021, they were just 22,500 -- affected partly by Covid and then the shortage of chips. Allowing for that, and adding on the numbers for Jaguar-Land Rover and top-end Japanese models like the Lexus, the total is unlikely to cross 40,000. The mismatch with the reported number of dollar-millionaires is obvious.
4. Larry Fink and Howard Marks feel that globalisation is on the retreat. Marks points to the examples of problems created by Europe's dependence on natural gas and oil imports from Russia, and the world's dependence on TSMC for computer chips as important triggers for this retreat.
5. John Micklethwait and Adrian Wooldridge have an excellent essay in Bloomberg signalling that the war could ring in the close of the current era of globalisation. Two graphs on trade stand out. One on the declining trade share of global GDP
Another on the spectacular growth of merchandise trade since the millennium
They conclude with an exhortation for American leadership,
Biden needs to reinforce the Western alliance so that it can withstand the potential storms to come... Biden needs to recognize that expanding economic interdependence among his allies is a geostrategic imperative. He should offer Europe a comprehensive free-trade deal to bind the West together; it could be a slightly remolded version of the rejected Transatlantic Trade and Investment Partnership, based on regulatory convergence (under which a product safe to sell in the EU is safe to sell in the U.S., and vice versa). He should also join CPTPP... Biden should pursue a two-stage strategy: First, deepen economic integration among like-minded nations; but leave the door open to autocracies if they become more flexible. China could be wooed toward freedom. But nothing will improve unless Biden first glues together the free world. That means freer trade — and the sooner he tells his party that, the better... A global new deal should certainly include a focus on making multinational companies pay their taxes, and the environment should be to the fore. But Biden should also talk about the true cost of protectionism in terms of higher prices, worse products and less innovation.
6. A new study on ride sharing companies (or transportation network company, TNC) like Uber or Lyft has interesting findings,
They found that a TNC trip actually decreases local air pollution, on average, compared to driving a personal vehicle... the team found that, on average, a TNC trip produces just half of the local air pollution costs of a personal vehicle trip, reducing air pollution-related health costs by around 11 cents. However, the team showed in their study that added travel on the road from TNC vehicles also carries major drawbacks. TNC drivers spend much of their time driving between passenger pickups or waiting for new ride requests, known as deadheading. This extra driving means that a TNC's fuel consumption — and by extension its greenhouse gas emissions — are on average about 20% higher than a personal vehicle. More time on the road also means more congestion, more noise, and more potential for vehicle crashes. Considering all of these factors, the team found that opting for a TNC over a private vehicle increases external costs to society by 30% to 35%, or about 32 to 37 cents per trip. This burden is not carried by the individual user, but rather impacts the surrounding community. Society as a whole currently shoulders these external costs in the form of increased mortality risks, damage to vehicles and infrastructure, climate impacts and increased traffic congestion.
7. As the Russian invasion has egregiously surfaced the issue of oligarch's using western capitals to launder and hoard ill-gotten wealth and buy into the elite society, Daron Acemoglu has a very good article where he advocates using the opportunity to clamp down on tax havens and plug tax avoidance clauses that allow the use of these off-shore and on-shore locations.
8. Janan Ganesh has a brilliant oped where he points out that the ongoing crisis has reminded everyone that it's energy and not technology that continues to be the driver of world history
Of all the illusions, though, the most quietly punctured is the idea that tech is the industry at the centre of the world: the one that makes it go round. Energy, it turns out, is still a worthier bearer of that mantle. This is an education for anyone born in the half-century since the Opec oil crisis. Silicon Valley’s self-image as the Middle Kingdom of the business world (or just the world) comes out in different ways... Tech is relevant in Ukraine; see the propaganda war. But next to the existential role of energy, which keeps Russia solvent, and has the west scrambling for alternative sources, what stands out is the modesty of its bearing on events. Silicon Valley is giving history a nudge here and there, no doubt, but not setting its essential course. That is still the role of people who dig stuff out of the ground for fuel.
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