Happy Wednesday Afternoon.
Here’s today’s ITK Daily | Annotated Edition.
To be ITK, know this:
The geopolitics of TikTok:
TikTok is not really social media.
TikTok is handheld television on a sugar rush with access to global content creatives streaming hyper-personalized channels.
So hyper-personalized is TikTok, it doesn't care about your lame friends and wacky aunts for content. TikTok has executed an artificial intelligence (AI)-based recommendation engine that satisfies your desires and peccadilloes with snappy videos.
TikTok knows snappy videos are easier to create than pen a witty Tweet or drop a 1,000-word LinkedIn thought leadership piece. TikTok recognizes that more people naturally can put out a decent TikTok video, copy a dance, or follow a meme, than, say, can write anything educational or entertaining.
The world’s largest economies, 2022:
🇺🇸 USA: $25.35t
🇨🇳 China: $19.91t
🇯🇵 Japan: $4.91t
🇩🇪 Germany: $4.26t
🇮🇳 India: $3.53t
🇬🇧 UK: $3.38t
🇫🇷 France: $2.94t
🇨🇦 Canada: $2.22t
🇮🇹 Italy: $2.06t
🇧🇷 Brazil: $1.83t
Geopolitics is the biggest threat to globalization: The consequences of a great power rupture may be even worse now than during the cold war. Martin Wolf
+ How might globalization end? Some seem to imagine a relatively peaceful “decoupling” of economies until recently stitched so tightly together. But it is likely that the fracturing of economic ties will be both consequence and cause of deepening global discord. If so, a more destructive end to globalization is likely.
+ History hardly suggests that a period of deglobalization is likely to be a happy one.
+ As John Plender recently argued, trade does not necessarily secure peace.
+ At worst, the outcome might be a bit like the cold war. This, however, is unduly optimistic. It is quite likely that the consequences of a rupture of great power relations will be even worse in our time than it was then.
+ The recently announced controls on US exports of semiconductors and associated technologies to China looks a decisive step. The aim is clearly to slow China’s economic development. That is an act of economic warfare. One might agree with it. But it will have huge geopolitical consequences.
+ It is conflicts over power that most threaten globalization. By seeking to enhance their security, great powers make their rivals more insecure, creating a vicious downward spiral of distrust.
Mexico-on-Thames: The UK needs less nostalgia for its imperial history – and just get on with it. FT
+ There have been massive changes in the structure of the British economy since the second world war, and in particular since the mid-1970s. The UK has deindustrialized, and an ever-greater share of its economic output has become linked to a London-centric financial services industry that already had begun to suffer from Brexit — even before these recent developments.
+ The UK has enormous strengths and massive societal infrastructure, even if it has recently failed to capitalize on them: a centuries-old commitment to the rule of law and property rights, a sophisticated (if sometimes weak-kneed) central bank, first-rate financial and educational institutions, enormous human capital, and a deep cultural affinity for trade and finance.
+ But, dogged by hostility to immigration and a stifling regulatory regime — particularly as applied to the housing and energy sectors — productivity has languished.
+ The UK needs less nostalgia for its imperial history; and more deliberate policies aimed at becoming a beacon for global talent, incentivizing entrepreneurs, broadening the base of economic activity, chainsawing red tape, significant investments in energy production, trading with the widest possible group of partners (including the EU) and, of course, swift, steady and disciplined fiscal management.
Germany struggles with its dependency on China: Olaf Scholz’s government promised a tougher approach to Beijing. But Berlin is divided on how far it should try to decouple its economy. FT
+ On Friday, he will become the first G7 leader to hold talks in Beijing with Xi Jinping since the start of the COVID-19 pandemic.
+ Berlin is being stalked by a fear that history might be about to repeat itself — on a much grander scale. The Ukraine war exposed the folly of Germany’s decades-long reliance on Russian gas. Now, the pessimists fear, it may be about to pick up the tab for its even deeper dependence on China, a country that has long been one of the biggest markets for German machinery, chemicals, and cars.
+ Scholz, who used to be mayor of Hamburg, has long believed that Germany has no choice but to trade with countries such as China. “You dance with whoever’s in the room — that applies to world politics just as much as the village disco,” he famously noted in 2018.
+ Experts say BASF has little choice but to focus its efforts on China. “China has 60 percent of the world’s chemical companies and talent and 40 percent of the resources,” says Wang Yiwei, professor of international relations at Renmin University and an adviser to the Chinese government. “If they don’t invest in China, where do they go?”
+ Angela Merkel’s frequent trips to China — she went there 12 times during her 16-year reign as chancellor, often accompanied by huge business delegations — symbolized the close ties. She would occasionally criticize China’s human rights abuses in Xinjiang and Hong Kong, but the economic relationship always had primacy.
+ Germany’s footprint in the Chinese market continued to grow. Volkswagen now sells 40 percent of its cars in China, and the country accounts for 13 percent of Siemens’ revenues and 15 percent of BASF’s. A recent survey by the Ifo think-tank found that 46 percent of industrial firms rely on intermediate inputs from China.
Into the tiger’s mouth: Olaf Scholz enters the widening gulf between China and the West: This week, the German chancellor will visit China, the first European leader to do so in three years, but observers fear Germany is repeating past mistakes by relying too heavily on an autocratic superpower. The Times
+ So much is riding on Scholz’s trip that The Times understands he has sent Jens Plötner, his top foreign policy sherpa, to Washington in an effort to allay concerns that he might step out of line and hand a propaganda coup to President Xi.
+ Scholz’s visit to China marks 50 years since the West German chancellor Willy Brandt re-established diplomatic relations with Beijing in 1972, during his broader rapprochement with the Union of Soviet Socialist Republics (USSR) and the eastern bloc.
+ German public opinion has also tilted sharply against China, according to a poll of 14 western states published by the German Marshall Fund. Only 12 percent of Germans now regard China as a “partner,” the joint-lowest proportion alongside Britain, while 43 percent see it as a “competitor.”
+ “People always talk about how China is a big market — no, China is a huge economy with a small accessible market." -- Jörg Wuttke, the president of the European Union Chamber of Commerce in China
+ @DrJJanes: Olaf Scholz has a China problem - beyond the visit to China lies the G20 meeting in Indonesia a week later. Instead of business as usual visit in Beijing, a better message:to get China to pressure Putin to end the war in Ukraine
Germany ain't decoupling from China anytime soon.
How China lost America Thomas L. Friedman
+ When future historians look back on 2022, they will have a lot to choose from when they ask the question: What was the most important thing that happened that year? Was it Brexit, Chexit, Ruxit or Trumpit?
+ “In 2012, 40 percent of Americans had an unfavorable view of China; today, more than 80 percent do, according to the Pew Research Center.”
+ To appreciate how badly China has lost America, you could start with this question to Beijing: “How is it that you had the biggest, most powerful lobby in Washington — and it didn’t cost you a penny — and yet you blew it?”
+ I’m referring to the U.S.-China Business Council and the United States of America-China Chamber of Commerce. These powerful business groups, representing America’s biggest multinationals, energetically lobbied for nearly four decades that more trade with China, and investment in and from China, was a win-win. So did the European Union Chamber of Commerce in China.
+ Today, these lobbies have gone mostly quiet.
The world according to Xi Jinping: What China’s ideologue in chief really believes. Kevin Rudd
+ In the post–Cold War era, the Western world has suffered no shortage of grand theories of history and international relations.
+ Xi has brought that era of pragmatic, nonideological governance to a crashing halt. In its place, he has developed a new form of Marxist nationalism that now shapes the presentation and substance of China’s politics, economy, and foreign policy.
+ Under Xi, ideology drives policy more often than the other way around. Xi has pushed politics to the Leninist left, economics to the Marxist left, and foreign policy to the nationalist right.
+ In short, Xi’s rise has meant nothing less than the return of Ideological Man.
+ Xi’s worldview is more complex than Mao’s, blending ideological purity with technocratic pragmatism.
+ China’s economic policy trajectory under Xi—from a consensus in support of market reforms to an embrace of increased party and state intervention—has therefore been uneven, contested, and at times contradictory.
+ CCP economic planners would be tasked with designing a “dual circulation economy,” which in effect meant that China would become increasingly self-reliant across all sectors of the economy while the world’s economies would become increasingly dependent on China.
+ Xi’s ideological beliefs have committed China to the goal of building what Xi describes as a “fairer and more just” international system—one anchored in Chinese power rather than American power and one that reflects norms more consistent with Marxist-Leninist values.
+ Xi is 69 years old and seems unlikely to retire; as a lifelong student and practitioner of Chinese politics, he knows full well that if he did leave office, he and his family would be vulnerable to retribution from his successors.
+ Xi is not completely secure. His Achilles’ heel is the economy. Xi’s Marxist vision of greater party control over the private sector, an expanding role for state-owned enterprises and industrial policy, and the quest for “common prosperity” through redistribution is likely to shrink economic growth over time.
+ Adding to these weaknesses are a number of long-term structural trends: a rapidly aging population, a shrinking workforce, low productivity growth, and high levels of debt shared between state and private financial institutions.
+ As a result, China might enter the 2030s still locked in the so-called middle-income trap, with an economy smaller or only marginally larger than that of the United States.
+ Xi now sees threats on every front.
Microsoft reportedly hasn’t offered any remedies to EU antitrust authorities investigating its $69 billion deal to buy Activision.
Of course instant groceries don’t work: Obstacles include: space, time, and reality. Amanda Mull
+ For basically all of the start-ups in question, the elevator pitch is convenience. Everyone needs food and beer and toilet paper, and getting it can be kind of a hassle.
+ The pandemic strengthened the industry’s conviction that we’ve reached a turning point in the appetite for instant groceries.
+ The unit economics are bad, the margins are bad, and the logistics infrastructure necessary to make the actual service function, even unprofitably, is extraordinarily complicated (bad). At base, these app-based, Silicon Valley–hyped start-ups keep running into two very inescapable IRL limitations: space and time.
+ Consider the inherent nature of groceries: They rot.
+ Then there’s the problem of real estate. To have any hope of making short-turnaround grocery ordering work, new companies have had to open up huge numbers of warehouses that are close enough to residential neighborhoods that assembling and delivering a couple bags of groceries in half an hour is broadly feasible.
+ Their biggest problem might just be that people like going grocery shopping. Not everyone, and not all the time, but it’s hardly the universally reviled task that investors and entrepreneurs seem to assume.
+ The notion that true convenience is staying at home with everything you need brought to you, instead of living in a neighborhood where the things you need are available nearby in the course of your day, is, in my mind, a huge tell as to why investors refuse to stop losing money on these companies.
+ But as many Americans realized during the worst days of the early pandemic, when demand for grocery delivery soared, that kind of isolation isn’t all that fantastic of a lifestyle choice. Mostly, it’s just kind of lonely.
CNN: US banks report more than $1 billion in potential ransomware payments in 2021
Forget free coffee. What matters is if workers feel returning is worth it. Commutes are still painful, readers say. And it’s hard to give up the joys of working from home. But many of those who have gone back to the office say they like it. NYT
+ When commutes recommenced, so did the frantic logistical after-school juggle that so many parents are familiar with — the confounding question of what happens between the end of the school day and the end of the workday, before managing that tiny sliver of time in which dinner has to be on the table.
+ The pandemic also gave people a chance to spend more time with their families, take lunchtime walks, fit in therapy appointments and get proper sleep. Life could be lived differently.
+ The value of being in an office can be hard to convey, but readers spoke of more efficient in-person meetings, more effective brainstorming, and an easier time getting to know colleagues.
Bank of America told its traders that they can work remotely — for only two days each month.
Miami’s first supertall tower breaks ground: WSJ reports the 100-story building requires special foundations and a pendulum-like device to prevent swaying.
WSJ Poll: Republicans have regained momentum since then and now hold a slight edge over Democrats, 46% to 44%, when voters are asked which party they would support in their congressional district if the election were held today.
AP: On election eve, the state of the US economy is a blurry one
These cooks, waiters, and casino workers could swing the Senate: Hospitality workers enjoy unusual clout in Nevada, where the powerful Las Vegas culinary union is rallying members to tip close races. NYT
+ Jim Manley, a political consultant who was an aide to former Senator Harry Reid, said the union became impossible to ignore in 2008, when it helped Obama beat McCain by 12 percentage points in Nevada, even though McCain was from neighboring Arizona.
+ Today, the hospitality industry is Nevada’s biggest private employer, and union members are entrenched in the state’s power structure.
+ To win in a midterm election that seems to favor Republicans, Nevada Democrats need the union to drive up Democratic voter turnout in Clark County, which includes Las Vegas, said Jon Ralston, a veteran Nevada political journalist.
+ “Control of the US Senate will be decided next week in cross-pressured states where most voters disapprove of President Joe Biden’s performance but also express unfavorable views about their state’s Republican Senate nominee.” -- Ron Brownstein
Trump and DeSantis plan dueling Florida rallies as rivalry builds: NYT reports former President Donald J. Trump and Gov. Ron DeSantis of Florida, who is viewed as his most likely political challenger, planned competing campaign events.
The too-much of Bono: In Dublin with the irrepressible U2 frontman. David Brooks
+ Bono is now 62 and reflecting on how many rock stars lost their mother at a crucial age: John Lennon, Johnny Rotten, Bob Geldof, Paul McCartney—the list of the abandoned goes on and on.
+ Musically and in his activist life, Bono exhibits a pattern of overreaching, his lofty goals sometimes exceeding his grasp.
+ The band’s other great strength is the pseudo-religious power of their concerts.
+ Bono was influenced by an obscure book called The Death and Resurrection Show: From Shaman to Superstar, by Rogan P. Taylor, which argues that modern performance culture has its ancient roots in shamanism.
+ He may be a mystic shaman on the concert stage, but his view of social change is unromantic; he knows that it starts with relentless pressure.
+ Bono has been ruthlessly single-minded. He will meet with anybody who can help those causes, no matter how noxious to him they might be on other subjects.
Commanders for sale?
+ @W7VOA: Owner of @Commanders has reportedly hired @BankofAmerica to sell the @NFL team.
Basketball’s top shrink on how finding purpose lifts performance: William Parham says self-reflection can help workers across industries deal with emotional baggage. Bloomberg
+ Long taboo, mental health is becoming a water cooler conversation at workplaces everywhere—professional sports included.
+ While the pandemic has inflicted a psychological toll on workers in all industries, it’s also given people a chance to reflect on what matters most, says William Parham, the National Basketball Players Association’s director of mental health since 2018.
+ They tie all of what they do into their job. I see that in basketball. Some succeed after sports, and there are others that do have challenges and things we continue to work on.
+ In my professional opinion, the apps are supplements, and they should be used as such. They should not be used as substitutes for getting real work done.
Enjoy the ride + plan accordingly.
-Marc
Marc A. Ross | Founder + Team Principal @ Caracal
Caracal produces ITK Daily.
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