In democratic countries, political analysts often try to sniff out any regional divisions that exist within a given country by looking at the voting patterns of that country’s electorate. In Italy’s recent election, for instance, it has been thought to be significant that Italians living in northern Italy tended to vote centre-right (including for the Northern League), whereas in southern Italy people tended to vote for the Five Star Movement.
In countries like the People’s Republic of China, however, where no such elections are held, different factors may be looked at instead, in order to gauge the level of regionalism that might exist.
One interesting thing to note here is that almost none of modern China’s top politicians were born in peripherally located areas like the southeast, southwest, northwest, or northeast. The only province in southeast or southwest China to have produced a somewhat notable number of Politburo members is Fujian, a relatively small province where Xi Jinping served 17 years of his career, which is important to China in part because it shares unique social and linguistic connections with the nearby island of Taiwan.
The chart above shows, by birth-province, the number of members in the politburo, politburo standing committee, party secretariat, central military commission, provincial party secretary, or members of previous party secretaries going back to 1990, adjusted to take into account the varying population sizes of each province. Apart from Fujian and Qinghai (which ranks high on this list only because it has such a tiny population, by China’s standards), all of the provinces at the top of this list are in the north or central coastal regions.
China’s most populous province, Guangdong, has had no leaders on this list. As of 2017, Guangdong may have also broken a thirty year tradition by having its provincial governor not be a native of the province. It is now one of the few provinces not to have a native-born governor.
In this picture above, we see the birthplaces of China’s current top leadership, the members of the Standing Committee. Here we also see the one big exception, Qinghai-born Zhao Leji. Zhao’s career is noteworthy. Zhao served as party chief of Qinghai, breaking the unwritten rule that a person should never be party chief in their birth-province. Zhao was later party chief in Shaanxi, where his parents were from; this too broke an unwritten rule, that a person should not be party chief in their “native” province. Now, Zhao has not only reached the Standing Committee, but has taken over Wang Qishan’s anti-corruption job, a critical position. Some have argued that Zhao has been able to rise in this way mainly because Xi Jinping’s family is also from Shaanxi.
Here’s a map of the birth-provinces of the current 25-member Politburo Central Committee (which includes within it the 7 members of the higher-ranked Standing Committee):
And here, finally, is a map of the birth-provinces of the current provincial party chiefs:
This article is derived from an example of tailored research I made for Rosa & Roubini Associates. You can read a version of it here: Emerging Markets – El Salvador.
…And here’s an extract from the article:
While this story is indeed a negative one, this negativity also serves to obscure the potential of Salvadoran-Americans, a diaspora group that, when measured in size relative to the size of its home country’s population, is not exceeded by any other country’s diaspora within the US. (See chart above). The Salvadoran American population is currently estimated to be 2 million, 31% as large as the population of El Salvador.
Among other things, this means that, even if Trump does not extend the protected status of 195,000 Salvadoran Americans, remittances to El Salvador might still rise due to an increase in US wages generally; an increase Trump seems committed to even if it means damaging US trade relationships, environmental regulations, and fiscal discipline.
More important, however — indeed, perhaps the most important fact about El Salvador today — is the unique age profile of the uniquely large Salvadoran diaspora living within the United States. The diaspora is a direct product of the terrible 1980-1992 civil war in El Salvador. Most Salvadoran American emigrants arrived in the United States during or immediately after the war. This means that the second generation of Salvadoran Americans, the more than 1 million born in the US, most of whom are bilingual, some of whom will achieve the American Dream of getting rich quick, and none of whom were directly impacted by the civil war, is now coming of age. The big jump in US-born Salvadorans came in 2000: they are turning 18 years old this year.
The results of the 2018 election in Italy reflected two main economic realities: the economic struggles in Italy relative to northern Europe, and the economic struggles in southern Italy relative to northern Italy. The former helped anti-establishment parties to gain a large share of the country’s vote. The latter resulted in Lega Nord and centre-right parties performing well throughout much of the north of Italy, and the 5-Star Movement performing well in the south of Italy.
In geopolitics, the school of thought that argues that geography is the most significant or fundamental element in politics, these two economic realities have the same obvious source: mountains. Italy and southern Europe are much more mountainous than northern Europe, and southern Italy is much more mountainous than northern Italy. Mountainous regions tend to be much poorer than non-mountainous regions. Italy is no exception.
The question most analysts are now asking is what the broader consequences of Italian politics will be. On the one hand, Italy is too big for Europe to bully. On the other hand, Italy is too big for Europe to ignore. I do not have any insight as to how one might succeed or fail at predicting the short-to-medium term financial outcomes of this political situation.
A question that analysts are not asking, though, is whether the geographic realities that are underpinning current Italian and European economics may change as a result of technological developments. To put it directly, will modern technology — the Internet, automation, etc.– alter the economic disparity between mountainous and non-mountainous areas?
If they were to do so, Italy would be in a far more advantageous position than it is today. Its internal economic disparities between north and south would shrink, while at the same it would likely be able to capitalize on its central position within the mountainous Mediterranean region. Its entire territory of 301,000 square km (84 percent as large as Germany’s, but with much greater proximity to the sea) and population of 61 million (74 percent as large as Germany’s) would suggest that Italy’s GDP might not, in the long run, remain as small (53 percent as large as Germany’s) as it is today. For this reason, if current politics cause Italian markets to turn negative, then long-term investment opportunities in Italy may grow.
So, will new technologies help the economies of mountainous areas to catch up with those of non-mountainous economies?
My suspicion is that they will. Companies like Google are now trying to develop technologies that will allow cheap, high-speed Internet to become accessible even in rural and mountainous areas. Logically, it seems plausible that mountainous areas would benefit from high-speed Internet more than non-mountainous areas, as the benefits of virtual accessibility may be more significant in areas where real, physical accessibility is low.
Automation may have a similar impact. If autonomous logistics facilities (warehousing, loading and unloading vehicles) allow for efficient intermodal cargo transportation, it could benefit geographies like Italy by making it easier to transfer goods between ships, railways, or large trucks (which do not operate well or at all in most mountainous areas) and small trucks (which do operate relatively well in mountainous areas, but are generally not efficient elsewhere).
And if transport vehicles themselves become autonomous, it could greatly increase the efficiency of using trucks, and particularly small trucks, and particularly small trucks operating in mountainous areas where speed limits are lower and safety risks are higher, as the labour costs involved in (especially small) trucking are far higher than in rail or sea transport.
In my view, the question of mountainous relative to non-mountainous areas may be the key long-term question in determining the north-south balance in Europe (just as the question of coastal relative to continental areas may be the key long-term question determining the east-west balance in Europe). Non-mountainous areas have performed extremely well economically during the past two centuries, presumably as a result of the spread of canals, railways, and highways, all of which are much better suited to flat landscapes than to mountainous ones.
But we should not assume that flat areas will continue to so outperform mountainous ones going forward. We should try not to lose sight of this long term question; it may ultimately be easier to answer than the questions about what will happen to Italian and European politics and markets in the shorter term.
I would not invest in Tesla. I think Elon Musk’s style is a little bit annoying, and I think many of his supporters are very annoying. More importantly I am not sold on the claim that Tesla will be able to compete against other auto or tech firms, even assuming that electric vehicles really do become widespread soon.
Looking at Musk’s business moves individually they appear, at best, to be high risk, high reward.
— Tesla’s approach to autonomous driving is not to use LIDAR, because LIDAR is expensive. This is unique: the other auto and tech firms are all betting on LIDAR. And because the economic viability of electric vehicles probably depends on autonomous driving (the vehicles need to be able to drive themselves to and from charging stations, as otherwise charging batteries may be too inconvenient when compared to conventional or hybrid vehicles), if this LIDAR-free strategy fails, it might put Tesla in a very tough position.
— Large electric trucks do not seem to make obvious economic sense: the batteries are too big, bulky, and expensive. It is difficult to see why these would be able to compete, in the short run, against conventional trucks, and in the long run against robots making it much easier to transfer cargo between electric railways and “first-mile/last-mile” conventional trucks or smaller electric trucks.
— Solar City. Even assuming that solar can compete with other power industries, and even assuming that using batteries to store power can compete with other forms of energy storage, it is difficult to see why a diffuse system of rooftop solar panels would be able to compete with solar farms, where installation and maintenance costs per panel are lower and where there is less shade.
–Boring company. Even assuming that Musk does succeed in reducing urban tunnelling costs, such tunnels would still be hugely expensive, so it is not clear why you would use them to move cars or people on `sleds`, when it would be much more efficient from a capacity point of view to simply use an existing technology within the tunnels: namely, trains.
The Unconventional, Long-Shot Case: Tesla Parking Lots
Readers of this blog will know I have a weird obsession with parking lots, because parking lots are the most ubiquitous type of American real estate and because they may be impacted more than other types by technologies like e-commerce and autonomous parking. Let’s imagine what Elon Musk might be able to do with a typical supersized suburban parking lot:
— No LIDAR, no liability, no problem: while autonomous vehicles in general might need LIDAR and might face liability issues, in a controlled, pedestrian-free environment — for example, in a designated autonomous zone of a parking lot — an autonomous car could function without LIDAR. This would have two benefits: one, it would act in effect as a valet service, making it easy to park; two, the parking lot could have an autonomous charging station for electric cars, so that your car could be charged while you are in the mall
— Sledding. The car-carrying ‘sleds’ imagined for use inside the Boring Company’s tunnels may not make economic sense within those tunnels, but they could make sense as sleds that could carry conventional, non-autonomous cars (there are hundreds of millions of these cars in America today, and they aren’t going to disappear overnight) to and from parking spots.
— The Boring Company. If the Boring Company ends up reducing the cost of conventional subway trains, the value of autonomous valet parking lots could increase, as people will drive their car to a parking lot at the nearest subway station, then get on the subway train while the car goes to park itself. (They may also be able to get in another car at their destination station’s parking lot, thus overcoming the ‘first-mile, last-mile challenge’ that plagues suburban transit in America today). Short-distance tunnels created by the Boring Company could also be used to link together parking lots that are close together: lots of suburban parking lots are giant ‘archipelagos’ separated by highways, for example.
— Electric Trucks. Electric trucks may not be economical in general, but could be economical in a specific situation: driving short ‘first-mile/last-mile’ distances, in daytime or overnight (electric vehicles are quiet, so better for nighttime use) between, for example, a commercial/industrial parking lot and a rail or conventional truck logistics station. So, for example, a company like Walmart could use electric trucks to bring in cargo quietly at night when its parking lot is empty, and also charge their batteries in the lot.
— Solar City. Rooftop solar panels may not be economically competitive in general, but on large flat roofs with little shade — notably, on large commercial/industrial roofs, next to large parking lots — they may be more economical. It may even become economical to put a solar roof above the large parking lots, to generate power while also helping to keep the parked cars shaded.
Okay, I admit, this is all unfounded, unclear, and far-fetched. Ultimately, it is based on the assumption that if wholly autonomous cars do not become widespread in the near future, then the most efficient, clean, and convenient methods of transportation and commerce may instead involve a combination of electric cars, conventional transit, and autonomous parking. Elon Musk’s unique mix of assets may be uniquely suited for this outcome.
Let’s discuss two sets of three: the land-labour-capital trinity of conventional economics, and the human-computer-telecommuter set that may soon become the three main categories of labour.
To state the obvious, the key relationship during the past generation has been the “capital” of North Atlantic economies (whether that capital be military power, technological innovation, or consumer demand), chiefly that of the United States, and the labour and “land” (most notably, the fossil fuels in that land) of Asia, chiefly that of the Chinese.
Even in recent years, this relationship between North Atlantic capital and Asian land and labour has arguably continued to intensify. Specifically, if we characterize “land” as being the type of energy production that has the greatest impact on local environments — if, for example, we define it as coal production, coal consumption, and the building of massive hydroelectric dams — then we can see that in recent years the employment of Asian “land” has continued to grow at a rapid pace relative to that of the North Atlantic economies.
This has been the result of a number of different significant trends: the growing “green economy” of Europe, the coal-to-gas electricity switchover in the United States that has been the result of shale gas production, the growth of coal and gas consumption in Japan as a result of Fukushima, the growth of hydroelectric power in China (though China’s coal industry growth has been flattening), and the growth of coal industries in southern Asia.
We know that poorer Asian populations in countries like China and India hold the weaker positions in this trade relationship. They supply the labour and “land” chiefly because the wealthier economies of the world mostly do not want to allow large-scale immigration or domestic environmental despoliation, yet are not able or charitable enough to furnish poor countries with capital wealth without demanding labour and natural resource wealth in return.
We also know that this global trade relationship might soon decrease to some extent, whether because of automation or protectionism in capital-rich countries, aging labour forces in Northeast Asia, or an attempt to reduce pollution in China.
The view of world trade decreasing because of automation and protectionism has become especially popular during the past year, because of political developments in both the US and China. Upon closer investigation, however, a reduction in trade may not actually be likely. The hitch here is the limitation of automation in wealthy economies. While computers and computer-run machines may now be excellent at doing tasks that humans are bad at — like being a grandmaster at chess or driving a truck for days without taking a pit stop — they are still terrible at a task that even human children find easy: manipulating objects.
The result of the limitation of automation may be the second set of three mentioned above: a human-computer-telecommuter division and cooperation of labour. Imagine, for example, an industrial or commercial site in the US that employs not only human labour, and not only machine labour, but instead a combination of a small number of on-site labourers, a large number of autonomous machines, and a large number of machines controlled by lower-wage labourers working remotely from poor locations in foreign countries.
In one sense, every party involved would gain in this relationship: rich countries would gain access to cheap labour without needing to outsource, poor countries would receive wages, and both would be allowed to harness the productive power of machines without having to wait until robotic technology is good enough to allow machines to replace labour altogether. Or without having to deal with the economic and social consequences of that day finally coming.
On the other hand, “telecommuters” might further income inequality within wealthy countries, by forcing labourers in those countries into even closer competition with labourers in poor countries. Moreover, it might make it more difficult to ignore the unfairness that exists as a result of real wages in rich countries far exceeding those of poor ones.
The effect of telecommuting — which includes, but is not limited to, a worker being able to control a machine that is located thousands of kilometres away — may be to make labour much more easily tradable across long distances. Since “capital” is easily tradable too, this may leave “land” as the odd man out. Land considerations, for example the location of cheap and/or clean electricity, or of ports capable of importing natural resources from abroad, may therefore become more important, at least relative to labour considerations, when choosing where to locate a new industrial or commercial site.
A place like Iceland, for example, which has abundant and clean power, difficulty in exporting that power directly because of its island location, ports proximate to North America and Europe, and yet no real labour force to speak of, could use a combination of autonomous and remotely-controlled machines to become a major industrial or commercial production site. A similar thing may be true of economies like Quebec, Norway, Manitoba, or British Columbia.
Remote-controlled machines do not get very much press — even if you Google it, you will probably not find much, with the exception of medical tele-surgeries — when compared to discussions of a far future in which widespread, wholly autonomous machines run the labour force. What is so scary, or exciting, about the possibility of remote-controlled machines, and of telecommuting labour forces in general, is that we may not have to wait until the far future for them to become widespread.
Imagine a map of the world in which land and sea are both drawn in the same colour, so as to be indistinguishable from one another. Imagine also that areas inhabited by humans are drawn in a different colour than areas that are relatively uninhabited by humans.
Such a map might reveal a great desert in the Northern Hemisphere, encompassing most of Asia, the Pacific Ocean, and the western half of North America. Within this great desert there would be a great oasis: Northeast Asia. There would also be many lesser oases such as California. The Indian Subcontinent would also appear to be a great oasis, between the desert of Central Asia and the desert of the Indian Ocean. But it would not be as remote an oasis as Northeast Asia.
Now imagine that all of the oceans on this map were to be greatly shrunk in size, in order to account for the ease of transporting bulk cargo by sea, whereas all of the mountain or hilly rainforest barriers on the map were to be greatly increased in size, in order to account for the difficulty of transportation in such areas. This map would now reveal the key position of the habited parts of Europe and the Middle East, which would now be seen as being extremely close to most of the inhabited parts of the Americas and Africa, as well as to much of the inhabited parts of Asia.
It would not now be surprising to learn that the watershed of the narrow Atlantic and Mediterranean seas is where an estimated two-thirds of global economic activity occurs. Nor would the fact that the Mediterranean economies have mostly struggled to keep up with those of the North Atlantic be surprising, given the mountains or deserts which surround the Mediterranean on all sides.
China, in contrast, would still seem to be in an isolated position. The mountains or hilly rainforests that make up much of the terrain of Southeast Asia and the east coast of India, plus the Tibetan plateau and Himalayas, would now appear to further isolate China from India. China would now also appear to be more internally divided. China’s non-natively-Mandarin-speaking areas along its southeast coast would now seem to be further from the Mandarin areas of the north (since mountainous lands lie between the two).
At the same time, China’s coastal areas would appear to be located closer to the rest of the world (including to the world’s Chinese diaspora, which disproportionately comes from southeast China), since the world’s seas would now appear to be much smaller than before. Japan, in contrast, would appear more internally unified when looked at using this map, as all of its lands border the sea and so would now seem to be closer to one another.
Of course, this is a very, very rough imagining of the practical realities faced by human economics, based on a number of assumptions that may be wrong, including most importantly on the idea that navigability and habitability are among the most decisive economic and historical factors. Arguably, it helps to explain some key questions – why Europe and Middle Eastern religions spread so widely, why Atlantic and Mediterranean are economies are so large, why China has often struggled with internal regionalism, etc.. Even, however, if we do accept it as a decent model of the world today, it does not tell us how the world might soon change.
If modern technology tweaks the realities of this world-map we have tried to imagine — if, for instance, autonomous vehicles make it far easier to transport bulk cargo in mountainous and hilly rainforest areas — that could alter what we might expect the world economy, political or financial, to look like.
- “Chindia” (and Chargentina)The term Chindia became somewhat popular during the BRIC boom a decade ago. It was used to refer to the idea that East Asia and South Asia would become economically much larger and somewhat better integrated with one another, together forming an Indo-Pacific economy that would rival (even if only a friendly rivalry) that of the Atlantic world, while also allowing China and India to dilute the global power of the US.
This scenario would also put Southeast Asia, Southwest China, and Northeast India in a key position in the world, controlling the trade routes (and much of the freshwater) of East and South Asia. Overland trade between China, Southeast Asia, and India might also threaten somewhat the position enjoyed by Singapore, Malaysia, and to a lesser extent Indonesia, all three of which benefit from ships sailing a long detour through the Straits of Malacca to get from the Pacific to the Indian Ocean. But, will any of this actually happen? It has not happened yet: trade between China and India remains quite low, given their sizes. We should also not overlook the possibility of a similar economic integration between two large countries that are separated by the world’s other great mountain range, the Andes, namely Chile and Argentina. Unlike China and India, these two nations speak the same language. Their population centres, though separated by high mountains, are located quite close to one another. Chile’s largest city, Santiago, and Argentina’s fourth largest city, Mendoza, are only 175 km apart, as the crow flies. But they are separated from one another by mountains reaching over 5 km high.Greater integration between Argentina and Chile could help both to balance against their much larger, Portuguese-speaking neighbour Brazil. It could perhaps then allow (Ch)Argentina and Brazil work together towards a greater level of South American or Latin American economic or political integration. This could turn out to be as important as anything that might happen between East Asia and South Asia.
2. Return of the Mediterranean(s)
In our map of the world we saw the key position held by the Mediterranean, but also that the mountains of Mediterranean countries have limited their development as compared to the flatter lands like northern Europe and the eastern half of the United States. If, however, technology allows for economical transport in mountain areas, then the Mediterranean region might regain some of the influence it enjoyed historically.
So too might other “mediterranean” seas that are surrounded in large part by rugged or rainforest lands. Most notable of these, perhaps, is the American mediterranean, the Gulf of Mexico & Caribbean, which, like the real Mediterranean, is centrally located (next to the narrow Atlantic, and between continents) but has much of its nearby population living in mountainous areas, in Mexico and Central America. The Caribbean, in turn, is near another “mediterranean” basin, the Amazon River and its many navigable tributaries.
3. The Heartland
Works of “Classic Geopolitics”, notably Halford Mackinder’s book Democratic Ideals and Reality (which I recommend reading), written a century ago at the end of WW1, lays out a vision of the world that is somewhat similar to the one I have tried to describe here. It identifies Europe and the Middle East as the economically-geographically central spot in the world, and argues that, given the Middle East’s relatively arid climate (the Middle East and North Africa had a far smaller population relative to Europe in 1919 than it does today), and given the spread of railways into landlocked areas, it would be the vast flat lands of Eastern Europe that might give rise to a political entity potentially capable of dominating Europe, the Middle East, and by extension the “World-Island” (meaning the Asia-Africa-Europe supercontinent), and by extension the world as a whole.
In this view, the devastating German-Russian wars of 1914-1917 and 1941-1945 were about who would control East Europe; the Cold War, the 1917-1918 part of WW1 (when Russia left the war and the US entered it), the 1939-1941 part of WW2 (before the Hitler-Stalin pact was broken), the Russo-Japanese war of 1904-1905, or various conflicts during the 19th century, such as the Crimean War or the Anglo-Russian “Great Game” in Central Asia and the Middle East, were about peripheral powers (Britain, France, Japan, the US, etc.) preventing an East European power like Russia and/or Prussia from expanding its influence.
Regardless of whether or not this Mackinderian perspective is an adequate one, it does seem that the central position of Europe, Eurasia and the Middle East arguably really does exist, and may persist. Eastern Europe continues to house by far the largest state and population in this area (Russia), and the Germans still by far the largest economy. But the more mountainous states and populations in Iran, Turkey, Ethiopia, and much of the Mediterranean and/or Arab worlds are also large, oil-rich, and centrally located. How this story will unfold going forward is anyone’s guess.
With technologies like online shopping, ride-hailing, and perhaps eventually autonomous vehicles, it may be that parking lots will more and more often be unfilled, outside of peak shopping hours.
Wall-Ball, therefore, (or Wal-Ball, if Walmart ponies up the $$ for it), is a sport that could be played in a jumbo-sized parking lot. Here’s how it’s played:
1. It’s played in an area the same size as a football/soccer field
2. The ball is a tennis ball
3. Each player wears rollerblades
4. Each player carries a hockey stick or a tennis racket. They can switch between the two as much or as little as they like, whenever they like. (This is where some of the strategy comes in: in deciding which to use, and when). If they want, they can also use both at the same time: they can wear their tennis racket sheathed in a pouch on their back, and pull it out to use as needed while holding their hockey stick in their opposite hand.
5. A goal can be scored in one of two ways: by scoring the ball in the net (the net is a soccer net), or by scoring in the ball through a hoop (think quidditch) high above the net
6. The goalie, who also wears rollerblades and uses a tennis racket or hockey stick, is the only player who can touch the ball with his or her hands. No other players can enter the goalie crease.
7. There is an offside line, as in hockey, rather than a moving offside as in soccer
8. When a player hits the ball out of bounds, the goalie on the opposing team immediately puts a new ball into play
9. There is no checking or slashing, with one exception: if a player sandwiches the ball between his or her racket and hockey stick, then a player on the opposing team can hit that player or slash at his or her racket
10. Sort of like major league baseball, where every venue can be shaped differently, so in Wall-Ball every rink could have a wall around some or all of the edge of the rink, with the height or placement of the wall differing from venue to venue. (It could also played without any walls or boards). Players can bounce the ball off it strategically like hockey players do off the boards in ice hockey.
So, that’s how you play Wall-Ball!