Oriens #197
Noise
On the virus et al., we have optimistic news for once. And we’re glad that the prospects of going back to 2019 are brighter than ever:
The “long-term” trend of contagions in South Africa is back to trend, undermining the case that the B.1.351 is deadlier than the “common” variant of the various. This is obviously still speculative, so take this with a spoon of salt.
This Atlantic piece makes the optimistic case for the U.S. economy on the vaccination front. The U.S. may go back to 2019 by the summer, though risks remain: contagion from other parts of the World with a relatively high share of infected population, and variants. This is the case of the reopening trade crowd.
Also on the optimistic case for the COVID life, this FT piece argues that the UK can build on the pharmaceutical regulatory capacity and industry it developed during the crisis and build an industrial policy upon that. The World will certainly need a biotech hub if, as we believe, environmental degradation will result in an increased prevalence and lethality of zoonotic diseases. Whether biotech and pharma replaces finance as the engine of British economy and London becomes a biotech hub remain interesting propositions that remain to be tested. John Authers from Bloomberg is also buying the “vaccination as proof of post Brexit Great Britannia” case as well. We remain long-term overweight pharma and biotech.
Last on optimism, this New Yorker piece (long read) describes how rural communities in Alaska have managed to be above the U.S. national average. It’s all about the community!
Israel swaps vaccines for prisoners with the totalitarian, leftist regime of Syria. $IZRL
Above the Noise
The COVID-19 exacerbated the lottery economy we’ve lived in since the de facto end of the welfare state:
The revenue distribution of OnlyFans creators follows a power law, with “the top 1% of accounts mak[ing] 33% of all the money. The top 10% of accounts make 73% of all the money. This isn’t the 80:20 rule; it’s the 80:14 rule.”
The oversupply of content in Spotify is pushing hit artists to drive Ubers and to push promoters and producers away. This FT article by Spotify’s former chief economist on the economics of music streaming is super interesting.
When you think about it, the Reddit crowd are really playing a lottery consisting of who holds the bag last. This FT piece describes the tribulations of the silver trade that redditers tried to pull through. This Dogecoin video (2 minutes) is really cute. #tothemoonwego
While Earth has historically been an unequal place, online platforms’ network effects will arguably make things worse. There are basically two solutions to this:
Regulate the platforms’ terms and conditions in a way that benefits small creators.
Tax corporate profits and refund the welfare state.
We are pessimistic about the prospects of either of these two happening any time soon, but we strongly recommend our readers to reread A Brave New World, which is our base case scenario for the medium-term future. This FT OpEd thinks that the pandemic provides arguments that the pandemic should result in a revamping of the welfare state, if you’re on the optimistic side of the debate.
Also on the regulatory environment of the tech landscape, this and this FT pieces find the flaws and virtues in the “Australia model”, after the Facebook and Google sagas. The main critique is that Australia ended up favoring the Murdoch media conglomerate and therefore shouldn’t be applied anywhere else. While true, the great thing about the “Australia model” is that, regardless of its merits, it offers a working solution to policymakers around the World. And anyone who has worked in policymaking or has been around policymakers, knows that they’re looking for working solutions that are good enough, or palatable enough. We expect imitators of the Australia model to prop around the World, to the detriment of shareholders of FAANG: countries with high institutional administrative capacity will refine the model; developing countries, particularly the ones with authoritarian tendencies, will likely take a more blunt approach. We remain long-term neutral on Big Tech.
Biomass is the favorite clean energy source of experts who recognize the limitations of wind and solar but are scared to embrace nuclear for political reasons. But this FASCINATING piece by Jonathan Ford at the FT makes clear how the case for biomass is based on optimistic accounting assumptions and principles. Nuclear and hydrogen remain our two go-to options to fight climate change.
Extell Development, the real estate company that developed Manhattan’s Billionaires Row is buying the dip, or at least it thinks it’s doing so, according to the FT.
China tightens online lending rules, a movement the FT attributes to the CCP’s animosity towards Jack Ma.
Sun Ray
Kafka advocated vigorously for the establishment of a hospital devoted entirely to the treatment of shell-shocked veterans: he understood PTSD better than most bureaucrats.
Long Reads for the Weekend Stack
One of the best reads we’ve come across in a while is this article by Noam Bardin, founder of Waze, on why he left Google after 7 years his company got acquired and why he stayed for so long. Must read for the VC, corporate VC, Big Tech crowds. Useful for anyone trying to make inroads in the corporate World. Interesting for the general audience.
There’s no birth control pills in the socialist republic of Venezuela, according to the NYT. Also on Latin American socialism, the leftist government of Mexico has nominated an alleged rapist (15 accusations, so far) and narco guy to govern the state of Guerrero. The state of Guerrero is one of the most important producers of opium.