North America, South America

Countries to Watch: El Salvador

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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.

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North America

Devil’s Advocate: An unconventional, long-shot case for Elon Musk

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.

For example:

— 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.

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North America

Wall-Ball: Sport of Heroes

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!

 

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North America

Unconventional NHL Strategies, continued

  1. Playing 5.5-on-4 

    Pulling your goalie tends to be less beneficial on a power play, since icing calls can’t be called against penalty killers (so they can attempt a long shot at an empty net goal without a consequence if they miss) and since the marginal benefit of the extra attacker is smaller when you compare the difference between 6-on-5 and 6-on-4 to the difference between 5-on-5 and 6-on-5. As such, while trailing teams will still usually pull their goalie during the last minute or two of the game if they are on a power play, they tend not do so on a power play with, say, three minutes left in the game.

    But what if, instead of pulling the goalie to get an extra attacker, a team instead uses its sixth man as a safety: positioning the sixth man around centre ice, so that he can help prevent a long empty net goal, while also being able to jump forward into the play as needed, in order (for example) to help prevent the puck from clearing the offensive zone, or to take a point shot. The sixth man would be playing, in effect, as both a goalie and a defenseman. And when he does jump into the zone at one point, a teammate from the opposite point could fall back to fill his safety position.

    This strategy could perhaps even be usable at some times when not on a power play, in order to take advantage of having the puck in the offensive zone (or in order to take advantage of tired defenders) at a time earlier than the coach would otherwise be willing to pull the goalie. If, for example, a coach is not comfortable with pulling his goalie with 2.2 and 20 seconds left in the game, but would rather wait until the 2 minute mark to pull his goalie, he could have the option of using a 5.5-on-5 strategy for 20 seconds first.

    2. Power play specialization and trade

    Power plays arguably consist of two different skill-sets. One is getting the puck set up inside the offensive zone, the other is scoring a goal. Many of the league’s star players or power play specialists are excellent at both of these skill sets. But there is unlikely to be a clean overlap between the two. Getting the puck inside the zone on a power play, for example, depends more on skating, while scoring on a power play depends more on skills like passing, shooting, obstructing the goalie’s vision, and winning face-offs.

    As a result, teams that do not have many great stars or power play specialists might want to think about a different strategy than the conventional “top power play unit, second power play unit” division of duties that NHL teams generally use. Instead, they may want to use a “specialization and trade” strategy: have one lineup optimized to getting the puck set up inside the zone, and then another lineup (some star players can play on both lineups) optimized for scoring a goal once already in the zone. The latter line would be subbed on the ice whenever there is a face-off inside the offensive zone on a power play. The former line could be subbed on (sometimes) on the fly when the opposing team shoots the puck down the length of the ice. This type of one-two punch strategy might also be useful at times playing 5-on-5.

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North America

Ontario: Low-Cost, High-Comfort Rail is much better than High-Speed, High-Cost Rail

Average is over. Long live average.

“High-speed rail” is a bit of misleading name: airplanes travel at a much faster speed. It might be better to call it “high-speed for rail” instead. Or call it “average-speed by rail”.

Of course, if you did refer to high-speed rail by any of those names, you probably wouldn’t have governments like Ontario’s pledging to spend 11 billion dollars to build a high-speed rail line from Toronto to Kitchener-Waterloo and London, Ontario. Even to those who support rail transport over less efficient, more polluting air and road transport, this move is difficult to justify from an economic perspective, given the population density of Southwest Ontario.

While high-speed rail is a good idea in populous areas where conventional rail options are already numerous (although even the Boston-New York-Washington corridor does not have one yet, which should set off alarm bells for those who think the Toronto-Guelph-Kitchener-London corridor, or even the larger Toronto-Windsor corridor, should build one) there are five main problems with high-speed rail in a place like Ontario.

One, it is much more expensive to build than conventional rail. Two, it has fewer stops and so can serve fewer cities than conventional rail. Three, it is less fuel-efficient than conventional rail. Four, it has much less capacity than conventional rail (if you double the speed of a rail line, you generally also must double the safe and comfortable distance required between each train, and so end up halving the capacity of the rail line) and so is much more expensive than conventional rail (unless wastefully subsidised by governments).

And fifth, yes it goes faster, but what’s the rush? What’s so bad about the existing 2.5 hour train from Toronto to London, Ontario…especially now that most people will soon have noise-cancelling wireless headphones and ultra-lightweight computers? And especially if e-commuting means that people will not have to make the trip as often as they otherwise might, or might be able to get work done while on the train. And anyway, don’t we continue to be told that automation and digital outsourcing going to do more and more of our work? Why exactly is someone rushing to or from Toronto so frequently that so much of our tax dollars should go to this “high-speed” train?

Ontario-HIgh-Speed-Rail

Instead of high-speed, high-cost rail, what Ontario could spend that 11 billion on instead is low-cost, high-comfort rail: rail on which it would be easy to work, relax, or sleep, and on which the needs of aging Baby Boomers who make up the biggest chunk of Ontario’s population, who are now already in their 60s and 70s, could be catered to more (making it easier to stow heavy suitcases, more bathroom capacity, etc.).

Indeed, what is really needed is not a way for to reach cities like London, Ontario or Kitchener-Waterloo, or even Windsor(-Detroit) without having to take a slow conventional train, but rather a way to reach more distant cities like Ottawa, Montreal, Chicago, and New York (all roughly 400-800 km from Toronto) without having to take a slow conventional train or an airplane. Ideally, we would have a train that is affordably priced, and so comfortable and smooth (i.e. with so few accelerations, decelerations, or bumps) that, at a low speed of 50-100 km an hour, a passenger could sleep easily though the night and wake up 400-800 km away. Even that would probably cost less than high-speed rail.

 

 

 

 

 

 

 

 

 

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North America

Boomeroomba, part 2

In a previous article, on the topic of playing tennis, I talked about the Boomer-Roomba test. An idea passes the Boomer-Roomba test if it is something that might be impacted by Baby Boomers reaching their 60s and 70s and by the introduction of everyday robots.

Downhill skiing, sadly, does not pass the test: many Baby Boomers will stop skiing in the near future. But what about less dangerous snow activities: snow shoeing, cross country skiing, sledding, skating, etc. etc.? These many Baby Boomers will still be able to do for a long time, with friends or with their kids and grandkids. Indeed many Boomers may soon have much more time for activities such as these, as they cut back on or retire from their jobs.

The management of snow and ice is also a task that robots (or at least, remote controlled machines) could be uniquely suited to handle. Clearing snow off roads, for example, is challenging mainly because it is both time-sensitive (you generally want it done as soon as possible, even if that means working overnight) and time-intensive (it takes a long time to clear heavy snow). Clearing snow off rooftops is even more difficult. For rural snowbelt areas that get walloped far more than even the snowiest cities like Syracuse, being able to plow and de-ice roads robotically could be a godsend. Advanced safety features in cars and busses, and advanced cruise control in cars, could also help these areas.

Creating and maintaining skating rinks — whether by clearing snow off a frozen lake, or by creating an artificial rink — is also highly labour-intensive work that could benefit from automation. And people really enjoy long-distance outdoor skating rinks, and skating on lakes. Skating also puts much less strain on the body than, for example, jogging does.

But perhaps the main reason that snowbelt areas might do well in the Boomer-Roomba test is a relative one: they might do better than northern cities in general. As Baby Boomers age, and as robots do more and more work in the economy in general, more people (whether a retired Boomer or an e-commuting Millennial) might move south, as snowbirds during the winter or (as many have already done) as year-round Sunbelt residents.

The reverse is also true, however: more people might move north in the summer, as reverse-snowbirds. Snowbelts could be well-placed, therefore, to become year-round attractions: serving reverse-snowbirds in the summer, and winter sports lovers in the winter. In contrast, non-snowbelt northern areas might see a boom in summer, and yet still see a continuation of the current trend of growing much more slowly than Sunbelt areas in general.

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Europe, North America

On Pulling Your Goalie: Unconventional Factors to Consider

NHL teams generally look at three factors to determine when to pull their goalie: the score of the game, the amount of time left remaining the game, and the location of the puck (i.e. if it is in the defensive zone, the goalie will not usually be pulled). It seems to me that two extra factors are needed:

  1. the exhaustion level of the opposing team’s five on-ice players
  2. the purpose of pulling your goalie

1. Exhaustion Level of Opposing Team’s Five On-Ice Players

Here’s a riddle: if your team was trailing by one goal, would you rather have the goalie pulled with 2 minutes left against a relatively well-rested defense or, instead, pulled with 3 minutes against a defense that is utterly exhausted as it is being caught on the ice during a really long shift?

There is no empirical evidence by which we can attempt to answer this riddle, because coaches almost never pull their goalies when down one goal with 3 minutes left. My guess, however, is that playing 6-on-5 against exhausted defenders with 3 minutes left may be better than playing 5-on-5 against exhausted defenders with 3 minutes left and then waiting until around the 2 minute mark to pull your goalie. Here’s why:

1) an exhausted defense is less likely to clear the zone and/or score an empty net goal

2) if an exhausted defense tries to score a long empty net goal and misses, resulting in an icing, then they will pay a big price for it: the other team will be able to bring on fresh players, which will make the difference in tiredness between the two teams even greater.

3) an exhausted defense playing 5-on-6 is less likely to get a lucky bounce or turnover that would allow them to clear the zone (or, if they do clear the zone, to clear it enough to get many of its players to reach the bench)

4) an exhausted defense playing 5-on-6 is more likely to have its goalie screened, so the odds of the goalie making a save to stop play and allow a line change is reduced.

5) by bringing a 6th attacker on the ice, you have the opportunity to seamlessly bring on a top player on who is fully rested himself.

6) pulling your goalie early means that the exhausted defense has less of a chance of winning the game by simply running down the clock. From a psychological perspective also, it may be more difficult for an exhausted player to muster his remaining energy when he knows he is not closed to being ‘saved by the bell’.

7) the exhausted players may not be that team’s best defenders; whereas with 1 or 2 minutes left in the game to play, a team normally has their best defenders on the ice. Moreover, if they cause an icing, you can bring on your own team’s best players

8) If the opposing team knows you might employ this strategy at some point during the game, they will be less willing to use their ‘coach’s challenge’ and so risk losing their time out. They will also be less willing to use their time out earlier in the game, even at times when they may need it. Your team gains an advantage by them being less willing to use their time out or coach’s challenge.

9) If the other team does manage to clear the zone and change lines, you can then use your own time out in order to rest your top line so that it can stay out on the ice for the rest of the game.

10) If you are playing a division rival or wild-card rival, and would like to deny them the chance of getting a point from an OT loss, this strategy gives you a (small) chance of winning the game in regulation

For all these reasons (some much more than others, obviously), I suspect that if you are facing a scenario where the opposing team’s line is exhausted with 3 minutes left and you are down a goal, you may be better off pulling your goalie then rather than waiting to do so with 2 minutes left against a better(-rested) line. If I were an NHL coach, I would try to simulate this scenario in practice during the offseason in order to try to answer this riddle. The reason I would run such an experiment is this: if it is true with 3 minutes left, what about with 4 minutes left? What about with 10? What if you were down by more than one goal? In other words, how exhausted do the opposing team’s players need to be, and much time left does there need to be, and how many goals down in the game do you need to be, to make this strategy worthwhile? We don’t know, as teams never try it.

We do know, though, that teams get caught out on long shifts fairly frequently. And we know that players’ effectiveness tends to drop dramatically when being caught on a long, tiring shift. So, if the strategy really were to prove effective, whichever team discovers it and implements it first may actually gain a significant advantage. (If it proved really effective, there may even be a case for waiting until the playoffs to deploy the strategy for the first time, in order prevent other teams from adopting the strategy themselves after seeing you use it). If successful, the benefit of simulating these scenarios in practice in the offseason could far outstrip the cost (of time and energy) that will be required to properly simulate the scenarios as required.

2. The Purpose of Pulling Your Goalie  

We assume that the purpose of pulling your goalie must be to score a goal playing 6-on-5. But what about pulling your goalie to increase your odds of scoring a goal 5-on-5? Consider the following scenario: your team is trailing by a goal with 3 minutes left in the game, and is in control of the puck in the offensive zone. Some or all of your players on the ice are physically exhausted, and your best offensive player is on the bench. You would like to swap out one of your tired players to bring your star on the ice, but you don’t want to change on the fly because you are worried the other team might take advantage of the brief swap to try to gain control of the puck and clear the zone. Well, maybe you should think about pulling your goalie for a few seconds to bring him in, and then, once he joins his teammates in the offensive zone, have another player exit the game as quickly as possible so that your goalie can reenter the game. (This plan also works better if the players on both teams are tired, as at best they are only likely to get a chance to score an empty net goal from behind centre-ice, so they would be risking an icing). If done smoothly, you might be able to improve your odds of tying the game by trying this move.

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