Wednesday Briefs – 1 July 2020

A weekly commentary on current events. Follow populyst to receive notification.

This week: Coronavirus in June; Accidental winners; New York City budget.

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Coronavirus in June

June was another month of great progress against the virus, albeit with some fresh concerns in a handful of states. Nationwide in the US, the seven-day average of daily deaths fell from 1,017 on June 1st to 586 on June 30th. On this measure, New York State continued its recovery with deaths dropping from 67 daily to 13. But Arizona, Florida and Texas saw increases from 16 to 35 (AZ), 30 to 39 (FL) and 22 to 29 (TX).

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While concerning, these increases are very modest compared to the big numbers of daily deaths we were seeing just ten weeks ago, with the US and New York at 2,618 and 760 respectively on April 15th.

Assuming a two to three week lag between the surge in cases and the rise in deaths, we would expect deaths to continue rising in these “hotspot” states and a few others for the next month or so. Based on the cases that we are seeing now, each of AZ, FL and TX could see deaths in excess of 100 on several days in July. In theory, the reversal or slowdown in the re-opening of these states should limit this surge however.

Accidental winners

Unexpected events like the pandemic produce unexpected winners and losers in the economy and stock market. Though the S&P 500 is still down for the year, erstwhile ho-hum stories Clorox and Kroger were up 42% and 18% in the first half of the year, while once-cool Shake Shack and Ulta Beauty are down 11% and 19% (and each down over 50% from its 2019 high).

On Main Street too, the divergence is clear, if not in actual sales, in demand for services or products. Most retailers and restaurants are faring poorly. Hair salons and personal grooming were devastated. But bicycle shops and the rare surviving toy stores are seeing strong demand. Much to their dismay, this demand is not necessarily translating into significantly higher revenues given that they have sold their inventories and are having difficulty sourcing product. Finding a bicycle of one’s choice during June was a near impossibility.

Instead of planning a summer vacation, consumers have moved their dollars towards indoor entertainment (electronic or other), bicycles, boats and, if anecdotal information is worth anything (it usually isn’t), horses. As far as we can tell from a quick browse on eBay, there is not yet a pricing mania in Lego or similar products.

New York City budget

Is New York City facing difficult times or will it once again defy the odds and prove to be antifragile (per Naseem Taleb’s terminology)? Betting against the city in recent decades has been a losing proposition, as was the case in the immediate aftermath of 9/11 when real estate activity recovered quickly.

The City relies on real estate taxes for a significant part of its budget and real estate is being pressured from the weakening economy, a scarcity of residential buyers (domestic and foreign), pressures on rents and the decisions of some companies to move out or to reduce floor space.

Ultra-luxury residential was vulnerable before the pandemic because inventory was rising rapidly with the completion of several condominiums on Billionaire’s Row or elsewhere. The pandemic has made things more complicated. Michael Hendrix of the Manhattan Institute relates the following:

The city’s wealthiest neighborhoods lost between a third and half their population since the pandemic hit, and recent unrest has not helped to draw them or the rest of the estimated 420,000 departees back. House hunters are reportedly “swarming” New York City’s outskirts. Roadway Moving reports “insane” demand from residents moving out of New York City, consisting “largely of higher net-worth individuals.”

A few years ago, we expressed doubt on the profitability of some ultra-luxury residential projects (then planned, now nearing completion), in Manhattan Ultra-Luxury ‘Battling the Serpent of Chaos’.

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Camus Against the Virus

Decency is of little value without a foundation of honesty.

Albert Camus’ masterful novel La Peste (The Plague) is enjoying a resurgence in the current pandemic. Published in 1947 in the immediate aftermath of WW2, it was not, or not only, about a biological plague but also about the plague of Nazism or other ideological cancers and their equally devastating effect on humanity.

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Albert Camus

Among the many different citations recently lifted from the book, this particular one has appeared in several articles and countless social media posts:

“It may seem a ridiculous idea, but the only way to fight the plague is with decency.”

Coming from Camus, this sentence looked unusual because there is no direct literal word in French for decency as we mean it in English. The closest are décence and pudeur but these words convey different meanings.

In the original French text, Camus had written: Read more

A Few Certainties About Covid-19

There is plenty that we do not know about the coronavirus. But let us take stock of the things that we do know for sure, and of some other things that we will soon know.Screen Shot 2020-01-27 at 2.29.15 PM

Real-world Exponentiality

By now, a child understands exponential growth. If you start with one apple on March 1st and double every three days, you will have a thousand apples on March 31st and a million on April 30th.

But in the real world, not the abstract world of math, there are constraints on that growth. Doubling your apples every three days is feasible for a month or so because you can probably find a thousand apples and also find a place to store them. But it would be more difficult to find, transport and store a million apples, unless you are willing to pack a six car garage with apples from floor to ceiling (accurate math). If you did, most of them would rot and your neighbors would call for psychiatric help, two other constraints on unbridled exponentiality. Read more

The Pandemic as a ‘Gray Rhino’ Event, with Michele Wucker

“The paradox of the Gray Rhinos is that the further they are down the road, the less likely you are to do something about them. But that is the time when it will cost the least and you are most likely to be successful.” ____ Michele Wucker

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Sami J. Karam speaks to best-selling author Michele Wucker about her 2016 book The Gray Rhino and how its method and lessons apply to the coronavirus pandemic. Gray Rhino threats are highly probable, highly impactful but often neglected until it is too late or until the cost of dealing with them becomes very high.

Topics include:

  • 0:00 Introduction of Michele Wucker
  • 1:05 When will we be able to travel to Asia or Europe again?
  • 3:10 Explaining the concept and examples of Gray Rhino events
  • 9:00 Various reactions to the spread of the pandemic
  • 15:50 Was the virus predictable?
  • 19:20 Why should we have been readier for the virus when it is so rare?
  • 22:00 Why we ignore what is “over there”. Did it start “over there” or over here?
  • 25:35 How could we have prepared for the pandemic?
  • 31:00 The current catch-22: deaths by virus vs. deaths of despair
  • 44:10 Stages of a Gray Rhino event applied to the pandemic
  • 50:10 What other Gray Rhino events do you worry about? A triad of Gray Rhinos
  • 55:45 How alarmists help avert deep crises
  • 59:40 Conclusion

TO HEAR THE PODCAST, CLICK HERE OR ON THE TIMELINE BELOW:

(photo of Michele Wucker by Hal Shipman)

2020 Election: Democrats Heading to a Brokered Convention?

An occasional commentary on the 2020 US Presidential Election in which demographics and identity politics play a bigger role than ever before. Here, we explain why primary and convention rules make it difficult for a frontrunner to emerge in a crowded field.

Today, President’s Day, is as good as any to draw some lessons from the early contests in Iowa and New Hampshire.

Crowded Field

FIRST, the Democrats do not yet have a candidate with proven national appeal. Although Bernie Sanders and Pete Buttigieg ranked first and second in both states, they have yet to show that they can do well in states that are more ethnically diverse. Iowa is only 4% African-American and 6.2% Hispanic/Latino, and New Hampshire only 1.7% and 3.9% respectively. The United States overall is 13.4% African-American and 18.3% Hispanic/Latino.

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For Bernie and Pete therefore, the test of national appeal will come in South Carolina and on Super Tuesday when several states with large minority populations will hold their primaries.

Although Bernie came first in New Hampshire with 25.7% of the vote, that result was as much cause for concern as for celebration. In 2016, running against only Hillary Clinton, Bernie had won New Hampshire with 60.1% of the vote. Of course, the lesser draw this year is explained by a more crowded field. Nonetheless, it showed that 74.3% of New Hampshire Democrats preferred someone else over Bernie, so long as her name was not Hillary Clinton. Read more

Talking About Cities, with Aaron Renn

“You go to some of these places [Midwestern cities], the question they ask when they meet you is ‘where did you go to high school’?… The fact that where you went to high school is a social marker places you in a community. You go to Washington DC and nobody cares where you went to high school… In New York, they ask ‘where are you from?’ because it is assumed that you are not from here. Some of these places in the Midwest… need more outsiders to come in because outsiders are the natural constituency of the new.” _____Aaron Renn

AaronRennAaron Renn, a Senior Fellow at the Manhattan Institute, speaks to Sami J. Karam about US cities. What makes the large coastal cities so successful? What are the prospects for mid-sized and smaller cities in the Rust Belt? What is the current state of play for mass transit? What role does immigration play in the development of cities?

Among the cities discussed, New York, Los Angeles, Chicago, Boston, Washington DC, Seattle, Houston, Dallas, Austin, San Francisco, Charlotte, Minneapolis-St Paul, Nashville, Columbus, Cincinnati, Pittsburgh, St Louis, Cleveland, Detroit, Madison, Iowa City, Rochester (MN), Singapore, Paris.

Topics include:

  • 0:00 Introduction of Aaron Renn
  • 1:15 What makes the large coastal cities so successful at creating wealth?
  • 8:30 Can a large city become dominant in a new sector? (e.g., New York in tech)
  • 13:00 How would you categorize non-coastal cities in terms of their prospects?
  • 16:30 Why some cities are struggling while others are restructuring successfully
  • 20:55 Will some smaller cities turn into ghost towns within twenty years?
  • 26:35 What is going on with Detroit’s recovery?
  • 30:40 The role of new immigrants in the development of a city
  • 36:50 Immigration policy in Canada and Australia compared to the US and UK
  • 43:50 What is the future for mass transit?
  • 48:00 The lack of city to city benchmarking in infrastructure costing and execution
  • 53:40 Is there anything going on in high-speed rail, other than in California?
  • 59:40 The decline of trust in institutions and the problem of cronyism.

TO HEAR THE PODCAST, CLICK HERE OR ON THE TIMELINE BELOW:

Purity or Universalism?

This article first appeared at Quillette.

A few days after his recent passing, the Manhattan Institute reposted a speech by V. S. Naipaul from October 1990. The title, “Our Universal Civilization,” captured the triumphal and optimistic spirit of that moment, nearly one year after the fall of the Berlin Wall. In order to render this universal civilization in greater relief, Naipaul related the following about his travels in Asia [emphasis added]:

Traveling among non-Arab Muslims, I found myself among a colonized people who had been stripped by their faith of all that expanding intellectual life, all the varied life of the mind and senses, the expanding cultural and historical knowledge of the world, that I had been growing into on the other side of the world. I was among people whose identity was more or less contained in the faith. I was among people who wished to be pure.

If we had read this paragraph without knowing its date or the subjects’ actual geography, religion, and history (in this case colonized non-Arab Muslims), we might have surmised that Naipaul was talking about parts of America and Europe that he had perhaps visited in the months preceding his death. “People whose identity was more or less contained in the faith” could easily apply to certain constituencies in the West today, the more so if one allows some latitude in the definition of the word ‘faith.’

Nearly 30 years after he delivered this speech, Naipaul’s assumption that this was primarily a religious or Muslim phenomenon seems quaint. Today, we can see that the wish to be pure has emerged in opposition to universalism in many parts of the world including our own. We can no longer claim that it is just Islam that has grown resistant to the universal civilization envisioned by the West in the late twentieth century. Some groups within the West itself have also rediscovered their own craving for purity. Continue reading at Quillette >>>