Sunday, March 3, 2019

Random Travel Observations, Part 1 (2019)

1. If you want to understand the world, ascertain the top three traded commodities, then track all changes from sourcing to retail. Today, the top two physical commodities are oil and coffee beans. (The most valuable commodity is invisible--it's your data--but that's another topic.) 

I've noticed most independent or mid-sized coffeeshops, even chains, are mixing beans from all over the world. A cup of coffee from all but the major retail outlets will most likely contain beans from several different regions. This seems odd, because supply chains have improved dramatically over the last thirty years. 

Then I realized supply chains--epitomized by Amazon, which progressed from simple books to multibillion-dollar sales of everything--aren't the problem. Buyers no longer trust political (tariffs) or weather conditions to provide them with consistent supply year-round over long periods of time. 

Meanwhile, financial markets as well as insurance companies betray their deficiencies in assisting smaller businesses, whether through inaccessibility of simple hedging instruments (the complex ones are more profitable) and/or ineffective credit scores (non-existent in most countries, handicapping domestic insurance and banking industries). When I was in Indonesia, I noticed most coffee beans from come from Sumatra rather than the superior quality from Java, which brings me to my next observation... 

2. First mover advantage is longer lasting when buttressed by legal and financial markets. Developed economies have not yet figured out how to balance entrepreneurship with "lawfare," the practice of using legal systems to stymie or stall competitors, especially smaller ones. 

A disproportionate number of small or individually owned businesses in developing economies are food or drink-related, which makes you wonder whether legal and financial systems are truly effective anywhere. In Saigon, Vietnam, many houses are two-stories, and the bottom floor serves as a mini-restaurant in the evening. Either permits aren't required for such businesses, or enforcement must be lax. In short, despite Hernando de Soto's considerable scholarship on this issue, legal and financial systems continue to disfavor small businesses.

3. America's physical infrastructure is nonexistent compared to similarly developed countries, and Canada's and Mexico's aren't much better. America's post-WWII afterglow--and its status as the world's sole leader not once, but twice from 1945 to 1991--led to public safety budgeting being prioritized. This first mover advantage created a political establishment that remains firmly in control to this day--even though the advantages of a world led by a single superpower no longer apply with competition from an ascendant China, an ambitious Africa, a rising ASEAN, and a resurgent Russia. 

Indeed, the more one studies America's economy and compares it to other countries, the more one sees a country on an inexorably fascist path, where an ever-increasing police state requires greater private expansion, especially overseas, and in conjunction with the banking sector, both domestic and international, in order to maintain funding--and stability. 

Stability and trade are linked. One cannot travel without seeing American products, usually never discounted abroad due to their premium image. In some cases, such as my favorite travel brand Columbia Sportswear, the retail premium is justified. In most cases, however, what you wear, eat, and buy is dictated by a complex set of trade (and, by default, pricing/tariff) agreements entered into post-1945, with the expectation of international organizations such as the IMF and World Bank providing loans to developing countries in exchange for favorable corporate treatment. After 1995, the creation of the WTO and its rules added layers of legal complexity on top of existing financial complexity (currency fluctuations, shipping insurance, etc.), making global trade highly dependent on multinational banks and politically-connected law firms. 

With such complexity, one quickly sees why media and advertising--as well as selective censorship--are so integral to the U.S. and other developed economies. How does a company differentiate itself from competitors without a compelling story, preferably presented through compelling individuals? And how does one resist the temptation to resort to made-up stories when real life does not always follow a clean script? 

4. America's marketing machine allows more opportunities to feel special and to participate than most other nations. For example, I'm a freestyle and Olympic wrestling fan. There will almost always be some event somewhere in America I can attend, whether D1/D2/D3 college championships, world events, etc. America's ability to put on a show is closely linked to its ability to market its brands at a premium and to control which brands see the most eyeballs, both in the physical and digital realm. Such control is crucial to generating an adequate ROI on federal government outlays. 

Yet, in terms of products I specifically "buy American" when overseas, only two come to mind: Columbia Sportswear and Gillette razors. Most products are fungible, making consumer-led economies--and their debt loads--precarious if "free trade" actually existed. 

(Note: America also makes great hamburgers, pizza, and burritos, all of which are difficult to find outside North America. Mexico and Central/South America have great tacos but not burritos.) 

5. Overlapping jurisdictions in most Western countries no longer work the way they were intended; indeed, they create unnecessary complexity while failing to promote checks and balances. Smaller countries like Singapore and perhaps even Nordic countries have advantages over larger countries due to the ability to avoid negotiation with multiple non-governmental entrenched interests. Better and more comprehensive public transportation is one obvious result. 

6. Voters want all the benefits of immigration but none of its downsides. Such magic is impossible. You do not get a Nâdiya or Zidane without some "nonperforming assets." No banking or hedge fund manager--with the best analytical tools available--can claim 100% or even 80% success; yet, we expect immigration agencies to outperform the "masters of the universe."

The key, as with most endeavors, is whether the costs outweigh the benefits. Obviously, if slavery or colonialism is responsible for a positive outcome, the cost is too high once we take a long-term view. At the same time, such philosophical analyses are irrelevant for practical purposes because modern immigration and many other migration shifts are different in nature and require different modes of thinking. 

Nations dislike competition and are having difficulty developing both financial and human investments; along the way, somehow, institutional failures have been superimposed on individuals. In the end, the principle remains the same, with an addendum: "Am I my brother's keeper?" If not, how much effort and investment is required to reach a sustainable and proper paradigm? 

7. Having seen many paintings funded by the Catholic Church, it seems much religious language (harlots, affairs, sexual miracles, modesty, etc.) and subsequent imagery try to create an environment where human nature is balanced with a code of conduct. We call these attempts to create a sustainable civilization "the law," though in the past, the terms "morality" and "religion" were more popular. One reason the 20th and 21st centuries are so problematic is because the written law has become as ambiguous and unpredictable as abstract morality.  

Natasha Trethewey: Well, paintings, just like poems, have a lot to do with the historical moment in which they’re made. They reveal the material culture of a moment. They’re not only giving us a vision of some historical event, but also historicizing it within the moment of the work’s making. And so I’m drawn to them because I write a lot about history. I’m also just very visual myself.

In America, one can blame almost everyone for this result. Law schools, which charge excessive tuition, limiting both their applicant pools as well as their graduates' futures. Lawyers, who have been unable to accomplish anything transformative since September 11, 2001. Judges, most of whom do not read the papers submitted to them (they rely on law clerks), and who are often out of their depth due to limited or specialized experience in former careers. What to do? 

8. Governments have not realized the marketing teams required to boost their popularity and capture citizens' attention are becoming their downfall. A simplistic example would be governments advertising anti-diabetes and anti-sugar messages. Citizens and voters are not stupid. They know their governments could have spent marketing money renting a space with a gym available to the public, but marketing is a one-time cost/bill, whereas running a public space is an ongoing, unpredictable concern. Even so, in smaller or more rural Filipino cities, where it may be less common to own a television, basketball courts are built and named by aspiring or elected politicians. Despite the potential for graft, it is precisely these ongoing community projects that create a civilization worthy of admiration. Unfortunately, in developed countries, these same projects cannot deliver votes and political messages to a broad enough audience at election time compared to media's outreach. As such, marketing triumphs over common sense in most modern democratic countries, distorting elections and communities. 

When thinking of democratic systems in an increasingly digital world, I'm reminded of the adage that self-inflicted wounds often cause more damage than direct hits. Foreign governments and billionaires have already realized a strategy of promoting, then focusing on the most divisive or unrealistic voices (Glenn Beck, Ben Shapiro, Ocasio-Cortez, etc.) through advertising dollars (e.g., Cambridge Analytica) can be more effective than buying a next-generation fighter jet. 
9. It has always been the best of times and the worst of times. Economic development has occurred through capital deployment and exploitation of natural resources, whether foreign and domestic, both avenues being unequally distributed. For example, many developing countries rely on massive, upscale shopping malls to burnish their image but do not seem to care about slums three blocks away. 
In Jakarta, Indonesia, Grand Indonesia and another mega-mall are right next to each other, making traffic unbearable. I walked a short distance away from the malls and realized both houses and casual restaurants for locals--the ones who can't afford to shop at the malls--were right outside, making me re-evaluate my ideas on zoning, eminent domain, and development. 

Modern developed societies feel unhinged despite lacking such blatant incongruence because they cannot provide predictable outcomes even for residents willing to invest time and money in mainstream systems (higher education, a taxi medallion, etc.). In contrast, the life of a slum dweller a few blocks away from "progress" in the form of a new mall doesn't change much--his motorcycle can still weave through cars, and he may even have more opportunities for income in the informal market. 

10. Countries outside of the United States are allowing Facebook, Instagram, and Twitter to become de facto gateways and advertising platforms for their small businesses. Most countries will regret not countering such influence when they realize advertising dollars, as well as visibility for domestic residents and international travelers, are controlled by a foreign power. At the same time, without satellites to integrate GPS-tracking, it's unclear how developing countries can achieve similar platforms. (Open source?) 

11. We've all heard of the phrase, "For God and country," but it wasn't until I visited several Commonwealth churches that I understood the full meaning. Most churches in the U.K. have plaques and burial plots commemorating local stalwarts. In larger cities, there may even be an entire wall covered with names of locals who died in WWI and WWII. (Australians in particular seem to have suffered greatly relative to their small population.) 
In the olden days, your life revolved around your family and your local religious institution, which was the de facto community hub. Starbucks or another "third place" for networking did not exist. A man cast out from his church had no other place to go. 

Additionally, because many Western countries have been at war for much of modern existence, local economies from Quebec City (gun manufacturing) to Brisbane, Australia revolved around military expenditures, not unlike several American cities today. The bridges you see in other cities might have been built to accommodate transport of munitions, not passenger convenience. 

Much of social miasma today concerns a movement away from military-fueled economic expansion and religion as the community's binding agents. If we are stumbling, it is because we've yet to find anything large and stable enough to replace either pillar, despite the knowledge that both are becoming more fragile each passing day. 

© Matthew Mehdi Rafat

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