Tech:Links for 18th June, 2019

  1. “”I did my first valuation of Tesla in 2013, and undershot the mark, partly because I saw its potential market as luxury cars (smaller), and partly because I under estimated how much it would be able to extract in production from the Fremont plant. Over time, I have compensated for both mistakes, giving Tesla access to a bigger (albeit, still upscale) market and more growth, while reinvesting less than the typical auto company. In spite of these adjustments, I have consistently come up with valuations well below the price, finding the stock to be valued at about half its price only a year ago. This year marks a turning point, as I find Tesla to be under valued, albeit by only a small fraction. Even in the midst of my most negative posts on Tesla, I confessed that I like the company (though not Elon Musk’s antics as CEO and financial choices) and that I would one day own the stock. That day may be here, as I put in a limit buy order at $180/share, knowing fully well that, if I do end up as a shareholder, this company will test my patience and sanity.”
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    The forever excellent Aswath Damodaran on his latest valuation of Tesla, and now he even has skin in the game. If you want to understand how to value a company, you can’t do better than Prof. Damodaran, and if you want to begin with a particularly challenging, but inevitably interesting company, you can’t do better than Tesla. For both of these reasons, worth reading in some detail.
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  2. “Since it began operations in 2010, Uber has grown to the point where it now collects over $45 billion in gross passenger revenue, and it has seized a major share of the urban car service market. But the widespread belief that it is a highly innovative and successful company has no basis in economic reality.An examination of Uber’s economics suggests that it has no hope of ever earning sustainable urban car service profits in competitive markets. Its costs are simply much higher than the market is willing to pay, as its nine years of massive losses indicate. Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business.”
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    Speaking of tech and automobile companies, this article is an extremely bearish take on Uber – with fairly convincing reasons to boot. A very long, but ultimately very convincing (and depressing) read. The party ought to end soon.
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  3. “Uber also has a very limited ‘network’ effect, because drivers can and do jump to whatever platform offers them the best terms – indeed most Uber drivers use all available platforms, and they accept rides from the platform offering them the highest rates – and customers can do the same (most customers have multiple ride-hailing apps on the phones, and can easily choose the cheapest). This means that even if Uber survives, it will likely always remain an extremely low margin business.”
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    Another take on the same issue – I don’t necessarily agree with all the economic arguments made in the piece – for example, I think the cost of owning a car as opposed to hiring one for a drive is under-emphasized – but the broader conclusion is all but inevitable.
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  4. “The Tesla position would presumably be that the addition of LIDAR would not have materially avoided the car accident and loss of lives, but this is going to be tough to showcase since in theory any use of LIDAR is going to incrementally improve the safety odds, assuming it is used wisely, and so it’s another part of the uphill climb by Tesla to avoid getting summarily dinged for their lack of LIDAR.They also cannot make the argument that they did not know about LIDAR or were somehow unaware of it, which is quite obviously not the case, including that their self-offered anti-LIDAR rhetoric acting as their own admission that they knew about LIDAR and made a deliberate decision to intentionally exclude it.”
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    Read this article to get a sense of what LIDAR is, and why it is important (or not) in the world of autonomous driving – but also read this article to get a sense of how cost-benefit arguments work in the real world, along with a great way to understand opportunity costs.
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  5. “Americans associate electric cars with the luxury of Tesla, the unrivaled conveyance of choice for the Sand Hill Road set. But these newly assembled vehicles, part of a family of SUVs called the Tang that retails from about 240,000 yuan ($35,700), are aimed squarely at middle-class drivers in the world’s largest electric vehicle market, China. Their manufacturer, BYD Co., is in turn the No. 1 producer of plug-in vehicles globally, attracting a tiny fraction of the attention of Elon Musk’s company while powering, to a significant extent, a transition to electrified mobility that’s moving faster in China than in any other country. Founded in Shenzhen in the mid-1990s as a manufacturer of batteries for brick-size cellphones and digital cameras, BYD now has about a quarter-million employees and sells as many as 30,000 pure EVs or plug-in hybrids in China every month, most of them anything but status symbols. Its cheapest model, the e1, starts at 60,000 yuan ($8,950) after subsidies.”
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    Uber, Tesla, sure. But have you heard of BYD? Or put another way, China had to come up sooner or later.
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ROW: Links for 12th June, 2019

  1. “Readers will by now be familiar with the list of industries impacted by the US China trade war. These include soyabeans, cars, steel, and semiconductors.But one commodity is increasingly important to how the tensions play out: students. The Chinese state media is now saying the government will issue a warning on the risk of studying in the US”
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    The FT reports on how Chinese students will now be discouraged from going to American Universities – in a sense, an expected move, but you would be surprised at just how dependent universities in America today are on foreign students. Interesting times.
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  2. “To summarize, based on the above I doubt that actual Chinese growth is more than 1% below the reported figures, at least up through 2018. Of course it’s possible that things have changed in 2019; if so I expect that to show up in upcoming airline travel data for China.”
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    Scott Sumner patiently reminds us that we should look at the data before making a claim, and having looked at the airline data, he rejects the notion that there is a dramatic slowdown in China. The truth, as usual, lies somewhere in the middle.
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  3. “Vietnam, like China really doesn’t import very many manufactures from the United States. That’s partially a function of the fact that the value added in Vietnam is often low, and thus Vietnam cannot afford a lot of top of the line U.S. capital goods (yet). But it is also a function of the fact that many of the global value chains that generate large (often offshore) profits for U.S. firms don’t give rise to that much U.S. production these days. There just isn’t much sign that the Asian value chains stretch back to include U.S. factories and workers. Fabless semiconductor firms that design chips likely export their designs to a low tax jurisdiction before they license their designs to an Asian contract manufacturer. The rise in Vietnam’s exports hasn’t been associated with a commensurate rise in exports from the United States to Vietnam.”
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    Brad Setser takes a look at whether Vietnam is the new China, and concludes that it kind of is, and kind of isn’t.
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  4. “It is not surprising that the CPC has worked so hard to extirpate the Tiananmen Square massacre from public memory. History – including the horrors of Mao Zedong’s rule – is too volatile a substance for the Chinese dictatorship. China’s leaders hold up their system of government as a model for other countries. But how can a regime be confident in the sustainability of its values and methods if it is afraid of its own past?”
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    Chris Patten (who knows a thing or two about this issue) reviews the Tiananmen square massacre, and ponders on what it means for China and Hong Kong today.
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  5. “Despite a small increase in young and female lawmakers—like Ms Suematsu, who is in her forties—local politics is still dominated by old men. “In these municipalities, candidates are so old they have a hard time putting up election posters,” says Shigeki Uno of the Nippon Institute for Research Advancement, another think-tank. Indeed, three-quarters of town and village assembly members are over 60. The oldest, aged 91, holds a seat on a city assembly in Shizuoka, in central Japan.Young people are loth to stand because local politics is not a financially rewarding profession. The law bans assembly members from holding other jobs concurrently. Their pay averages around ¥300,000 ($2,740) a month, hardly enough to support young families. “It’s basically a job for the retired,” sniffs Mr Uno. And for little pay, the workload is onerous.”
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    The Economist reports on Japan, and it’s ageing population – and what that means for democracy on the ground, at local elections.

Tech: Links for 11th June, 2019

  1. “Microsoft now generates about $7.5 billion in annual revenue from web search advertising. That is a pipsqueak compared with Google’s $120 billion in ad sales over the last 12 months. But it’s more revenue brought in by either Microsoft’s LinkedIn professional network or the company’s line of Surface computers and other hardware.How did Bing go from a joke to generating nearly three times the advertising revenue of Twitter? Bing is emblematic of what Microsoft has become under Satya Nadella, the CEO since 2014: less flashy and less inclined to tilt at windmills in favor of pragmatism.”
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    A nice (and at least to, somewhat surprising) read about how Bing isn’t an utter failure – far from it. It isn’t Google, of course, and probably never will be, but the article highlights how starting Bing was in retrospect useful for many different reasons.
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  2. “One effect of Donald Trump’s sanctions on China’s tech giant Huawei seems to be a growing nationalistic sentiment among some Chinese consumers: sales of iPhones have fallen in recent months, while Huawei products have seen an uptick. It isn’t hard to find patriotic slogans backing the embattled company on social-media platforms such as Weibo.”
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    The article speaks about the possible “Balkanization” of technology, and one can easily imagine a fairly dystopian view of the future as a consequence of this. Not saying that this will happen, to be clear – but the possibility should be contemplated.
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  3. “Lena Edlund, a Columbia University economist, and Cecilia Machado, of the Getulio Vargas Foundation, lay out the data in a new National Bureau of Economic Research working paper. They estimate that the diffusion of phones could explain 19 to 29 percent of the decline in homicides seen from 1990 to 2000.“The cellphones changed how drugs were dealt,” Edlund told me. In the ’80s, turf-based drug sales generated violence as gangs attacked and defended territory, and also allowed those who controlled the block to keep profits high.The cellphone broke the link, the paper claims, between turf and selling drugs. “It’s not that people don’t sell or do drugs anymore,” Edlund explained to me, “but the relationship between that and violence is different.””
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    Staring at phones the whole day may actually have saved lives. Who’d have thought? The rest of the article is a nice summary of other hypotheses about why crime in the USA went down over the years.
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  4. “The current state of monetization in podcasting mirrors the early internet: revenue lags behind attention. Despite double-digit percent growth in podcast advertising over the last few years, podcasts are still in a very nascent, disjointed stage of monetization today.”
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    A rather long article about podcasting as a business today, but I found it interesting. The reasons I found it interesting: I have a very small, fledgling podcast of my own, monetization in podcasting hasn’t taken off, and I remain sceptical that it ever really will, and most importantly, listening to podcasts is truly instructive.
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  5. The camera app VSCO is unlike its social counterparts. Though it has a feed similar to Facebook’s News Feed and Twitter’s Timeline, it doesn’t employ any of the tricks meant to keep you hooked. VSCO doesn’t display follower or like counts, and it doesn’t sort its feed with an algorithm. Instead of optimizing toward keeping you on its app, VSCO — which last reported 30 million monthly active users — simply encourages you to shoot and edit photos and videos, regardless of whether you post them or not.
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    Speaking of monetization, this newsletter tells you how VCSO has funded itself – and speaks about pricing in general when it comes to technology today.

Links for 5th June, 2019

  1. “But I think Guo is here engaging in a strategy that is common for those who want to nudge the Chinese system in a more market-oriented direction: they tend to describe things are being more competitive and market-driven than they actually are, so that marginal change in that direction seems unremarkable and logical. If you pound the table and call China’s state-owned enterprises a core interest of the nation, it becomes quite difficult to change them. If you say, China is mostly a market economy already, then gradually reducing the role of SOEs over time seems pretty unthreatening.”
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    Andrew Batson’s blog is entirely worth following (and for a variety of reasons!). In fact, the second link today will also be from his blog. But for the moment, let’s focus on how China might respond to America’s push against China’s State Owned Enterprises (SOE’s).
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  2. “Local governments discovered they could borrow basically without limit to fund infrastructure projects, and despite many predictions of doom, those debts have not yet collapsed. The lesson China has learned is that debt is free and that Western criticisms of excessive infrastructure investment are nonsense, so there is never any downside to borrowing to build more infrastructure. China’s infrastructure-building complex, facing diminishing returns domestically, is now applying that lesson to the whole world.”
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    Andrew Batson has a rather more optimistic take on the Belt and Road Initiative. Not as bad, as he mentions, as Brahma Chellaney makes it out to be. On the other hand, I still do think that Batson is far too optimistic about it – as usual, the truth lies somewhere in the middle!
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  3. “The strategy we have in mind would comprise three mutually reinforcing components: an increase in the skill level and productivity of existing jobs, by providing extension services to improve management or cooperative programs to advance technology; an increase in the number of good jobs by supporting the expansion of existing, local firms or attracting investment by outsiders; and active labor-market policies or workforce-development programs to help workers, especially from at-risk groups, master the skills required to obtain good jobs.”
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    Dani Rodrik writes about how to create “good jobs”, and lots of them. I don’t think what he suggests will likely work, especially in a country like India, for a variety of reasons – but the biggest is that the kind of top-down, bureaucratic approach he suggests simply hasn’t worked in the past.
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  4. “The overall trend was an incredible intensification of output. Splitters, one of the most skilled positions, provide a good example. The economist John Commons wrote that in 1884, “five splitters in a certain gang would get out 800 cattle in 10 hours, or 16 per hour for each man, the wages being 45 cents. In 1894 the speed had been increased so that four splitters got out 1,200 in 10 hours, or 30 per hour for each man – an increase of nearly 100% in 10 years.” Even as the pace increased, the process of de-skilling ensured that wages were constantly moving downward, forcing employees to work harder for less money.”
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    An extremely readable extract from a book called The Red Meat Republic, this article in the Guardian speaks to how America’s beef industry came to be what it is. A great read for students of Industrial Organization, labor economics, development, pricing, transport economics – and more besides.
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  5. “China has an industrial policy whose goal is to be competitive in these [branded goods] and other areas. Tariffs will limit profits for these companies and prevent Chinese products from achieving full economies of scale. So this preemptive tariff strike will hurt the Chinese economy in the future, even if it doesn’t yet show up in the numbers.”
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    Tyler Cowen often forces himself to write the viewpoint on the other side – or at least, that’s how I interpret this article. I’m sharing it partly because it is worth reading (that’s a given, right?), but more so because that trait is worth emulating: force yourself to argue from the other side’s viewpoint. Whether in writing, or just as a thought exercise.

Links for 3rd June, 2019

  1. “His social credit score has been lowered, and the South China Morning Post reports that Xu also faces travel restrictions for accusing Chen of being a fake master. As a result, Xu can’t ride in second class or above on planes or sleeper trains, and cannot ride high-speed trains at all (and if he had kids they’d face prohibitions, too).”
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    First, the excerpt above is noteworthy because of the real world implications of a reduction in one’s social credit score. Second, read the article to find out why his score has been reduced in the first place. Truly mind boggling.
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  2. “There could be two reasons for this. In rural areas, the downside in incomes appears to have eroded any positive effects of lower inflation. Among urban consumers, the persistent inflation in goods and services other than food may have restricted the real and sentiment impact of lower food inflation. To be sure, it is possible that if inflation is lower but consumption has not gone up meaningfully, then savings have risen. But there is no clear data to prove this yet.”
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    Ira Dugal points out the problems of low inflation in India (who’d have thought it, huh?), but also, more broadly, points out how difficult it is to think through macroeconomic issues.
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  3. “The government has no business being in business. There are scores of government owned companies that do exactly the same thing – like BPCL, HPCL and IOC are all refiners and oil marketing companies. There’s OIL and ONGC. And a GAIL, a Petronet, an IGL and so on. That’s just in the Oil and Gas space. There are a gazillion public sector banks. There needs to be a regular practice to get rid of most of the stake in these companies and to corporatize them. What better time than when you have a mandate?”
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    Deepak Shenoy walks us through his wish list of what the new government should do, and provides (as always) an easy to understand overview of what the response of the markets has been (thus far) to the election results.
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  4. “The Great Trigonometrical Survey is credited with having measured the heights of 79 Himalayan peaks; they include the Everest, K2 and Kanchenjunga. It also measure the baselines of Saint Thomas Mount, Madras, baselines of Calcutta, Coimbatore, Tanjore, Guntur, the measurements of the Cauvery Delta, the measurements of Mysore and the Great Indian Arc – an arc extending from the tip of the Indian subcontinent to the mountains of Himalayas. The measurement of the great Indian arc is a significant milestone for Indian geography because it was the first effort to plot, in mathematical terms, the vastness of the subcontinent from the north to south.”
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    The Madras Courier helps us understand the importance of the Great Trigonometrical Survey, and gives us a peek into the romance associated with the entire exercise. If you find yourself interested in the entire exercise, there is also an entire book about it.
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  5. “So, here’s a story. On 15 April 2019, when the roofspace over the crossing of Paris Cathedral caught fire, I was in a pub in east London having a burger. My initial reaction was not one of anxiety for the 12th-century Early Gothic church, with its splendid 13th-century Rayonnant superstructure and rose windows with contemporary (if VERY restored) medieval stained glass, but instead a slight feeling of dismay of how long this would mean the building would be closed and how much it would cost to replace the roof. It was also a great shame to lose the crowning achievement of the restorer Eugène Viollet-le-Duc, his magnificent Neo-Gothic crossing flèche, albeit mere days after all the statues had been removed from it for restoration. Anyway, then I went off to watch Kubrick-themed Italian thrash-metal revival band Ultra-Violence open for Wisconsin death metallers Jungle Rot without that much worry.”
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    A rather flippant, and therefore enjoyable dissection of the Notre Dame, the damage done to it, and what could be done about it. I do not know enough to comment about whether it makes sense or not, but I learned from reading it – hence the recommendation. Via The Browser.

Links for 30th May, 2019

  1. “While England are the clear favourites, the rest of the field is pretty even. Any team can beat any other on its day. India have their best-ever bowling attack in a World Cup, and Virat Kohli is the greatest batsman ever in this form of the game – but I am worried about their chances of winning it. The reason for that is strategic understanding. Kohli’s captaincy can be dubious at times in the shorter forms of the game, and he would consistently underestimate par scores while playing for his franchise in the IPL. The team has the talent to win – but does it have the approach?”
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    Amit Varma on how T20 changed the approach to ODI cricket, among other things. As always, worth reading.
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  2. “The result is the same – looking at all-time data, games where the team batting first scored between 200 and 250 are the most interesting. While games in this range remain interesting even after the 2015 World Cup, we find that games in the 250-300 range are on average more interesting, with interestingness sharply dropping off after 300.”
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    Karthik S. disagrees with Amit Varma’s article above – which is kind of the point of being a cricket fan. And that point, of course, spills over into other domains as well!
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  3. “The Louvre pyramid also highlights Pei’s tendency to recycle his own ideas. This practice is no disgrace if an abandoned original of merit is ultimately realized or improved with further development. Frank Lloyd Wright often dusted off plans for buildings that were sidelined for one reason or another and sometimes recycled them successfully. Pei’s first attempt to realize a monumental sloping glass structure was his initial 1966 proposal for the John F. Kennedy Library and Museum, for a site next to the Harvard campus in Cambridge.”
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    I know next to nothing about architecture (if that!), but I enjoyed reading this article about IM Pei. Tangentially, this also reminded me of A. R. Rehman and his decision to reuse some tracks for Slumdog Millionaire. The parallels are hard to miss – and therein lies a useful lesson.
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  4. “Given that robots can move through space in uniquely nonhuman ways, they wouldn’t necessarily be subject to boundaries between private and public spaces that constrain delivery people, allowing them to move goods in and out of homes in a constant flow. Amazon already has its “smart” lock system allow human carriers to enter a home briefly to drop off packages, and Wal-Mart is testing a similar system that lets its workers deliver groceries to a home’s refrigerator. But fully automated robots could travel deeper into homes without compromising privacy. You wouldn’t need to get dressed to greet a robot, if you noticed its arrival at all. It might unobtrusively enter and leave through an opening the size of a pet door.”
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    What all can robots do? The paragraph above, in particular, was striking to me. Here’s why: I thought of the problem in this way – what can robots change in the way homes are run? The excerpt forced me to think the other way around: how do homes need to change to best utilize robots? Again, a useful lesson! Both links above (3 and 4) are thanks to The Browser. I subscribe to it, and so far, I am not regretting it at all.
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  5. “China took the first shots, and they took them a long time ago. For over a decade U.S. services companies have been unilaterally shut out of the China market, even as Chinese alternatives had full reign, running on servers built with U.S. components (and likely using U.S. intellectual property).
    To be sure, China’s motivation was not necessarily protectionism, at least in the economic sense: what mattered most to the country’s ruling Communist Party was control of the flow of information. At the same time, from a narrow economic perspective, the truth is that China has been limiting the economic upside of U.S. companies far longer than the U.S. has tried to limit China’s.”
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    The USA hasn’t started the trade war with China under President Trump, it has responded to China’s “shots across the bows”. Please read the entire article, it is an important one.

Links for 27th May, 2019

  1. ” In today’s world, we’re typically writing contracts in natural language, or actually in something a little more precise: legalese. But what if we could write our contracts in computational language? Then they could always be as precise as we want them to be. But there’s something else: they can be executed automatically, and autonomously. Oh, as well as being verifiable, and simulatable, and so on.”
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    Stephen Wolfram on computational languages, and what it might mean for all of us in the future. Can’t say I understood all of it right off the bat, to be honest – which is why I’ll be reading it again sometime later.
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  2. “I was interested in the notion that you could take a busy place — an airport and a marketplace, you can call it kind of a mall, with hundreds of shops and all that comes with it — and cohabit it with a magical park, which is nature at its best, which is relaxing and serene, and is the escape from all of that busyness.Airports are not exactly relaxed places, and I thought, what would be better than to create a place of total serenity?

    We’ve planted thousands of trees and all kinds of other vegetation. And now, six months since we planted it all, it’s already a lush jungle.

    You walk through the trails, and you forget you’re in a city, and you forget you’re in an airport, and you forget you’re in a building. You’re just out there in nature and, in that sense, it’s completely magical.”
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    Singapore’s Changi airport now has a seven storey waterfall apparently. Of course it does.
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  3. “Econtwitter is wonderful. Yesterday, an undergraduate emailed me to ask for book recommendations about the overlap between economics and philosophy. I recommended:Amartya Sen The Idea of Justice
    Michael Sandel What Money Can’t Buy: The Moral Limits of Markets
    Agnar Sandmo Economics Evolving
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    D M Hausman and M S McPherson and D Satz Economic analysis, moral philosophy, and public policy
    Then I asked Twitter, and here is the resulting, much longer, list. I won’t editorialise about them, although some are not good undergraduate intros in my view. One striking thing is how few recent overviews there are, however (as @esamjones also pointed out on Twitter). Huge thanks to all who made suggestions. This is a fantastic collective list.”
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    Whatever bookmarking method you use, add this to that resource. And as she mentions, #econtwitter, really is wonderful. Diane Coyle with a very important, very useful list. Undergrad resources for the intersection of economics and philosophy.
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  4. “If you missed the Chinese mission, maybe it’s because you were focussed on the remarkably inexpensive spacecraft from SpaceIL, an Israeli nonprofit organization, which crash-landed into the moon on April 11th, soon after taking a selfie while hovering above the lunar surface. The crash was not the original plan, and SpaceIL has already announced its intention of going to the moon again. But maybe you weren’t paying attention to SpaceIL, either, because you were anticipating India’s Chandrayaan-2 moon lander, expected to take off later this year. Or you were waiting for Japan’s first lunar-lander-and-rover mission, scheduled to take place next year. Perhaps you’ve been distracted by the announcement, in January, on the night of the super blood wolf moon, that the European Space Agency plans to mine lunar ice by 2025. Or by Vice-President Mike Pence’s statement, in March, that the United States intends “to return American astronauts to the moon within the next five years.””
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    The New Yorker explains how the moon is becoming a rather crowded place, and is likely to only get even more crowded in the years to come – and also explains why.
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  5. “Santacreu and Peake compared research and development (R&D) efforts of the U.S. and China for the period 1999-2015. As of the most recent year, China’s R&D intensity, measured by R&D spending as a percentage of GDP, was 2.1% of GDP versus 2.8% for the U.S.However, China’s R&D intensity grew from less than 1% over the period studied, therefore increasing considerably faster than that of the U.S. “Because R&D intensity is a proxy for technological advancement, these data suggest that China is catching up to the U.S. in technology,” the authors wrote.”
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    Ask yourself this: in about thirty years from now, are you more likely to see the world’s innovation hub be in China or America? This article points to the likely answer.