Geopolitical Business Communications
Happy Monday.
Here’s today’s ITK Daily.
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How a vast demographic shift will reshape the world NYT
A new study finds that 47,000 Russian combatants have died in Ukraine: Economist reports the invasion has at least doubled Russia’s total combat losses since 1945.
War in Ukraine: The revenge of the Global South: Unwilling to condemn Russia's invasion of Ukraine or apply sanctions targeting Moscow, the Global South has emerged as a geopolitical 'continent.' Le Monde
How Telegram became the Russia-Ukraine war’s virtual battlefield: The app used by Yevgeny Prigozhin to voice discontent before the Wagner group mutiny has become crucial to understanding the conflict. It’s also filled with PoW testimonies, gruesome images of airstrike casualties, and even videos of war crimes. The Times
Ben Wallace: I’m resigning from politics at the next cabinet reshuffle: The MP, who is stepping down as defense secretary, talks Nato aid in the Russia-Ukraine war — and fires a stark warning about future conflicts. The Times
Biden is beating China on chips. It may not be enough. Dan Wang
US envoy John Kerry arrives in China to restart climate talks: Le Monde reports President Joe Biden's climate envoy follows in the steps of two other high-ranking officials, Antony Blinken and Janet Yellen, who have also recently visited China.
How China’s renewables boom is fueling its coal expansion David Fickling
Indonesia, South Korea bonds benefit from China turmoil: Foreign investors favor Asian debt markets where currency gains are expected. Nikkei
Japan and Saudi Arabia to launch regular diplomatic dialogue: Nikkei reports PM Kishida meets with crown prince on three-day tour of Middle East.
Bloomberg: EU signs deal with Tunisia for migration, trade ties
FT: EU must boost funding in race for green transition, Gentiloni warns
The EU should aim for its own Belt and Road Martin Sandbu
UK formally joins CPTPP to little fanfare and low expectations: Nikkei reports Malaysia stands to gain from free palm oil exports, but few other benefits seen.
Why the Orkney Islands are considering joining Norway: They are unlikely to succeed at seceding from Scotland. But that was never really the point. Economist
Modi in Paris: The triumph of realpolitik Le Monde - Editorial
Italy calls on the Louvre to return seven of its archaeological objects: Le Monde reports investigations by archaeologists have led to the identification of half a dozen works of questionable provenance in the Paris museum's collections.
El Salvador in the grip of the 'Bukele system': Nayib Bukele, the president of the Central American country, enjoys great popularity thanks to his handling of the COVID-19 pandemic and his fight against gangs. But his opponents criticize increasingly frequent breaches of democratic principles. Le Monde
Bloomberg: GOP mega-donors divide, boosting Trump and imperiling DeSantis
DeSantis campaign sheds staff amid cash crunch: Politico reports fewer than 10 staffers were let go Thursday, according to a person familiar with the campaign.
Ron DeSantis’ campaign finances have some flashing warning signs: NBC News reports most of DeSantis' money came from donors who “maxed out” and can’t give again, as small donations have been a struggle for Trump's GOP challengers.
FT: Fundraising triggers fresh questions over DeSantis campaign
‘A long slog’: Inside DeSantis’s early struggles and effort to rebound: More than seven weeks in, skepticism about the Florida governor’s 2024 bid has grown. WP
CNN: Ron DeSantis to sit down with CNN’s Jake Tapper for an exclusive interview Tuesday
Republican party’s divisions over Ukraine on show at testy Iowa summit FT
Neither Trump nor DeSantis will get the GOP nomination George F. Will
+ G.K. Chesterton called the game of “Cheat the Prophet”: People listen politely to explanations of what is inevitable, then make something else happen.
+ Trump, as stale as a month-old crust of sourdough, is running to win the 2020 election.
+ His crybaby crusade might cause even his star-spangled supporters to wonder how to square their proclaimed love of the nation with their hero’s insistence that it is so saturated with corruption that his landslide win could be erased without a peep from courts. Including some with his — how sharper than a serpent’s tooth it is to have a thankless judge — appointees.
+ A New Hampshire student, referring to the Jan. 6, 2021, riot that followed Trump’s incendiary harangue and disrupted the certifying of electoral votes, asked DeSantis last month whether Trump “violated the peaceful transfer of power.” DeSantis’s less-than-courageous answer: “I wasn’t anywhere near Washington that day. I have nothing to do with what happened that day.” Good grief. He wasn’t anywhere near Gettysburg in July 1863 and had nothing to do with the moon landing in July 1969, but that does not preclude him from having thoughts about these events.
+ Political prophesy is optional folly, but: There are not enough Republicans, in Iowa or the nation, enamored of the snarling contest between Trump and DeSantis — their competition to see who can despise the most American defects — to nominate either of them. Which is grim news for President Biden.
Preparing the way: The alarming plans for Trump’s second term Economist
Biden, with sluggish small donations, waits for liberal energy to rise: Wealthy Democrats have thrown their money behind the president’s re-election bid, but for many reasons, the party’s small donors have yet to step up their contributions. NYT
The dangers of 'Bidenomics': President Joe Biden's policies disregard economists, focusing mainly on geopolitics. Le Monde
+ Biden has launched his re-election campaign by focusing on the economy, touting the concept he calls "Bidenomics."
+ He has relentlessly been promoting his economic policies – a mixture of protectionism, subsidies and social measures at a time of full employment – as ushering in a new era following the Keynesian economics of the post-war years and the neo-liberalism later inaugurated by Ronald Reagan.
+ Bidenomics are accomplished without economists, sometimes even against their advice, because the economy – like war to the military, as Georges Clemenceau said – is too serious to be entrusted to economists.
+ The economic policy is managed by the geopoliticians – namely White House National Security Advisor Jake Sullivan, tasked with confronting China – and the social and labor specialists.
+ "Biden wants to put economists in the back seat, behind the foreign policy and social people. Being a mainstream or center-left economist, which his team would call neoliberal, is a negative," said Adam Posen, president of the Peterson Institute for International Economics, a pro-free trade think tank based in Washington.
+ Biden's break with classical doctrine played out in three stages.
+ The first occurred during Barack Obama's presidency, amid the financial crisis. The Democratic president pursued a reasonable orthodox policy. As a result, unemployment remained high, and America soon found itself stuck with growing inequality in what was dubbed "secular stagnation."
+ A second stage came in 2016 with the election of Donald Trump, who won over the deindustrialized states known as those of the "Rust Belt." Biden vowed that the Democrats would not be caught out twice. He opted for an industrialist, blue-collar rhetoric that included a repudiation of free trade.
+ A third stage came with the COVID-19 pandemic, which exposed the vulnerability of US companies' supply chains, particularly with China, now a national adversary. Russia's war in Ukraine further exacerbated the situation.
+ The vision was repeatedly articulated by Sullivan, who described the new "Washington Consensus." There were two spectacular policy measures: The 2021 stimulus package, in the wake of Biden's election, passed at a time when the economy was already recovering and vaccines were being delivered to the population.
+ Biden did not hear the warnings of moderate neo-Keynesian economists Olivier Blanchard and Larry Summers, who predicted a surge in inflation. The facts proved them right, with prices now up 16% since Biden took office. The situation is not resolved, and the Fed is likely to decide to raise interest rates above 5%.
+ The second measure was the adoption, in the summer of 2022, of a massive plan to subsidize microprocessors and renewable energies. This was the Inflation Reduction Act. The legislation received a warm welcome from companies eager to cash in on valuable tax credits.
+ The US was reindustrializing, protecting itself by repatriating the production of strategic assets such as microprocessors and rare earths, and finally taking on the issue of global warming. Bravo. A triumphant America could say to its detractors, "You should do the same thing!", to quote Biden's Secretary of Energy Jennifer Granholm.
+ "Biden can get rid of economists, but he can't get rid of economic realities," Posen said.
+ According to Posen, the 2024 election will be more of a referendum on the many conservative decisions of the US Supreme Court and the Democrats' ability to mobilize their camp, as demonstrated by the mid-term elections in 2022, which the Democrats won thanks to the Supreme Court's decision to abolish the federal right to abortion.
+ "If the Democrats win, people like Sullivan will say it's because of Bidenomics, but, in my opinion, it will have nothing to do with the economy, and more White men will continue to vote Republican than they realize," Posen said. "In every election since 2000, the influence of economics in predicting voting has declined." The battle has unquestionably become cultural, so it is essential to remain clear-sighted about the risks Bidenomics carry.
No-show Republicans shun NGA: The once-vital forum for common ground among state leaders has fallen prey to polarization. Its new chief, Utah’s GOP Gov. Spencer Cox, has something to say about that. Jonathan Martin
Democrats have a man problem. These experts have ideas for fixing it.: How can Democrats counter GOP messaging on masculinity? Should they even want to? A roundtable with Democratic party insiders and experts. Politico
The trouble with American exceptionalism Ruchir Sharma
+ The US has been running deficits almost every year since the 1960s without triggering a serious financial crisis.
+ Within 10 years, US government interest payments will exceed spending on defence and on social programmes such as Medicaid.
+ Through 2025, the trillions unleashed by this administration will push government spending up to 39 per cent of GDP, most of it not covered by new revenue.
+ So why should anyone care about the US’s deepening debt and deficits? Because it is now one of the most fiscally irresponsible nations.
+ Its deficit has climbed the ranks to worst in the developed world, its public debt is already the third highest after Japan and Italy.
Spirits in the skies of summer: As the dog days near, the nation’s mood is careful, watchful. We don’t know where all this will go. Peggy Noonan
The American left and right loathe each other and agree on a lot: Economic philosophy is not just changing—it is converging. Economist
The world is in the grip of a manufacturing delusion: How to waste trillions of dollars. Economist
Tesla begins cybertruck production after yearslong wait: WSJ reports the electric pickup rolled off the line at the company’s Texas factory nearly four years after a prototype was unveiled.
Why Hydrogen cars refuse to die: With so many lingering questions about batteries in electric vehicles, having a backup technology isn’t as crazy as it might sound. WSJ
+ Ineos wants a low-carbon way to deliver the same kind of extreme off-road capability and long range its customers might expect from its gas-guzzling Grenadier. This is where hydrogen excels.
+ “I don’t think one technology is superior to the other. I think they’ve got different uses. And I think we need a mix of technologies in the future,” says Lynn Calder, chief executive officer of Ineos Automotive.
+ BMW is currently touring the world with a fleet of hydrogen-adapted iX5 sport-utility vehicles to make the case for the technology, despite having little if any involvement in commercial vehicles.
+ One of its arguments is that building roadside infrastructure for both battery EVs and hydrogen ones will end up being less expensive for countries than just building an EV infrastructure, which will require huge upgrades to the power grid.
+ BMW’s fuel cell iX5s are a political calling card: It is easier to galvanize the attention of policy makers if you can show them a car.
+ The same might be said even of the Japanese and Korean fuel-cell EVs you can actually buy: Companies need them to show commitment and raise interest among politicians who often find it easier to focus single-mindedly on battery EVs.
+ Politics matter because hydrogen has for years been caught in a chicken-and-egg conundrum where investments in vehicles only made sense if there was refueling infrastructure, and vice versa.
+ Now more infrastructure is planned, particularly in the European Union and China, which is one reason companies along the vehicle supply chain are increasing their investments. Automotive parts giant Bosch this week said it would spend an additional $1.1 billion on hydrogen projects, starting with a fuel-cell stack it is supplying to US trucking startup Nikola.
What would an Amtrak revival look like? Bloomberg
Elon Musk dominates orbit with Starlink satellites: Nikkei reports the billionaire entrepreneur's SpaceX takes 60% share of global launch business.
Microsoft-Sony agreement opens way to seal $75bn Activision deal: FT reports the Call of Duty pact signals truce in prolonged battle and ends Japanese group’s biggest objection.
Lights, camera, industrial action: Hollywood’s biggest strike in 60 years FT
+ The strike will also have an impact on the California economy.
+ The last writers strike, which lasted 100 days in 2007-08, cost the state an estimated $2bn — but it did not shut down production as extensively as this one is likely to do.
How Allbirds lost its way: Quality complaints—and intractable holes—have dogged the hot shoe company, which rolled out an assortment of new products but found environmental sustainability a tough sell. WSJ
+ Its shares have lost more than 95% of their value since a November 2021 initial public offering and on Friday closed at $1.28.
+ The company, founded in 2016, tapped into the idea that businesses can make money, be innovative and do good in the world, especially when it comes to the environment.
+ To help the planet, co-founders Joey Zwillinger and Tim Brown believed consumers didn’t have to stop buying stuff, just that the stuff needed to be made differently.
+ It leaned on its popularity to pursue a hyperfast growth model pioneered by other online disrupters such as Warby Parker that sold goods directly to consumers.
+ It turns out that not everyone wants to dress head-to-toe in merino wool, which although better for the environment than nylon or polyester, isn’t as durable.
+ The company lost focus, unsure if it was selling to sneakerheads or soccer moms, said the people, who are familiar with Allbirds’ product development and marketing.
+ A key business assumption, that consumers’ concerns about the environment would drive them to buy sustainable products, has been a tough sell.
+ Customers will accept one degree of weirdness, but not two.
+ Brown and Zwillinger said they named the company Allbirds because when New Zealand was first settled by humans its wildlife consisted mainly of birds, not mammals.
+ Environmental concerns are among the least important attributes consumers look for when buying shoes and clothing, according to a survey in March of 750 US consumers by Wedbush Securities. Comfort and price are among the most important.
The working-from-home illusion fades: It is not more productive than being in an office, after all. Economist
WSJ: Jane Birkin, the singer who inspired the Hermès bag, dies at 76
Tourists are back. Is it time to tell them to stay away? FT
+ Overtourism was becoming an issue in the last years before the pandemic. Now that international travel is reviving unexpectedly fast, it’s an issue again from Venice to Fiji — the popular Pacific destination where the word “overtourism” is googled far more than anywhere else on Earth.
+ The official number of international tourist arrivals doubled from 1998 through 2019, to 2.4bn a year. Typically, in each destination, the rise was cheered on by the local tourist industry and state-funded tourism marketing outfit. Most residents just watched it happen.
+ In Barcelona, to cite an extreme case, the number of tourists staying in hotels jumped from 1.7mn in 1990 to 9.5mn in 2019 — a number that excludes the city’s Airbnbs, some of them entire buildings that have been removed from the local housing market and essentially offshored.
+ Barcelona is one of several places that risk becoming a Venice: a former city that turned into a museum-cum-fun park. Venice now has around as many beds for visitors as for inhabitants: about 49,000 each.
+ Here’s a painful paradox of urban tourism: the cities that attract most visitors are cramped, ancient places that lack space even for residents. You don’t get much tourism in the Houston exurbs.
+ At times, European anti-tourist rhetoric echoes European anti-immigration rhetoric. A common line is, “We are being swamped by misbehaving invaders who refuse to adapt to our superior culture.”
+ The tourism industry directly accounts for about 4 per cent of European gross domestic product, rising to 10 per cent if you take account of its links with other economic sectors, says the European Parliament.
+ Tourism provides jobs that cannot be offshored.
+ Visitors help fund the upkeep of monuments and museums. And some cities, especially in southern Europe, have little to flog but their heritage. When tourists disappeared during the pandemic, places such as Florence and Barcelona realised uneasily how few alternatives they had.
+ Realising that many visitors will come only to destinations branded “Amsterdam”, the authorities gave the medieval castle in the nearby town of Muiden the English name “Amsterdam Castle Muiderslot”, while the beach at Zandvoort became “Amsterdam Beach.”
The urbanites addicted to ultra running: 'It's given me incredible strength. In negotiations, I've learned not to give up': Pushing the limits of endurance, a growing number of executives are training for extreme races which require them to combine the need for oxygen with the perfect performance. Le Monde
+ "When you live in a city with a boring day-to-day life, you need to feel alive," said 31-year-old Alexandre Boucheix, a project manager with JCDecaux.
Money and profile, sure, but what does Lionel Messi bring to Miami on the pitch? With less gifted players around him, Inter’s defense-shy superstar could struggle with the physicality of MLS. Jonathan Wilson
+ Inter Miami are now the fifth most-followed American sports franchise on Instagram, their numbers leaping from 900,000 to almost nine million.
+ Messi did win the World Cup with Argentina. But in part it’s because the rest of the squad was overwhelmingly committed to helping Messi win the World Cup, compensating for his lack of defensive work; and in part it’s because international football, because of the relative lack of time players and coaches spend together, operates with less sophisticated structures than modern club football and so remains more able to accommodate individuals.
+ This is about raising the profile of Inter Miami particularly and MLS in general, and about raising Messi’s status in the US. The deal will do that and it will make Messi richer.
+ But it does say something about the condition of modern football that the marketing potential of the move so overshadows what it might mean on the pitch. This used to be a sport.
Inside the Lionel Messi to Inter Miami deal — seeing off Saudis, equity offers, and Beckham and Co.’s secret trip The Athletic
Enjoy the ride + plan accordingly.
-Marc
Marc A. Ross | Chief Communications Strategist @ Caracal
Caracal produces ITK Daily.
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