Collection – The Race To Run Is Against Yourself

It can be deceiving to hear the Stoics talk about an indifference to external recognition or rewards. Marcus says that fame is meaningless. Seneca talks about how success or wealth is out of our control and therefore not to be prized. Don’t want what other people want, they say, don’t get sucked into meaningless competition.

So does this mean that the Stoic doesn’t try? That the Stoic is resigned to whatever happens to them in life, caring about nothing, uninterested in improving or growing? No, of course not. The Stoic is still incredibly ambitious—only they focus on an internal scorecard versus an external one.

A similar sentiment was well-expressed by the entrepreneur Sam Altman, who has helped thousands of startups over the years with his work at Y Combinator, when he was interviewed by Tyler Cowen for the Conversations with Tyler podcast:

“I think one thing that is a really important thing to strive for is being internally driven, being driven to compete with yourself, not with other people. If you compete with other people, you end up in this mimetic trap, and you sort of play this tournament, and if you win, you lose. But if you’re competing with yourself, and all you’re trying to do is — for the own self-satisfaction and for also the impact you have on the world and the duty you feel to do that — be the best possible version you can, there is no limit to how far that can drive someone to perform. And I think that is something you see — even though it looks like athletes are competing with each other — when you talk to a really great, absolute top-of-the-field athlete, it’s their own time they’re going against.”

Competition, Altman’s friend and mentor Peter Thiel has saidis for losers. When you try to beat other people, you set yourself up to fail. But going against yourself—trying to improve yourself—that’s a competition you have control over. It’s one you can win.

A Stoic triumphs over themselves, over their own limitations, and in this—even if the margin is small—is the most important victory of all.

Collection – Male Vulnerability Isn’t Pretty—But It’s Important

Why do we pretend we’re “just okay” when we’re obviously not?

I found the frogs in a puddle after a thunderstorm. The earth was still wet. Insects and amphibians were crawling out of holes to soak in the humid sun. I tottered along the sidewalk grasping my Teenage Mutant Ninja Turtles Party Wagon, where I stored the small frogs I’d discovered. Settling next to my neighbor’s outdoor air conditioning unit, I peeked over the top to stare at the internal fan blades purring in a rhythmic cycle. Rust had eaten away a few slats to create a small opening. I looked into the hole, which reminded me of the blender my mother used at home. I was smart enough to know if I put my hand through the slats, my fingers would disappear like a tomato in a blender.

The air conditioning unit was one of the few dry spots among the puddles gathered on the sidewalk. I sat down, removed the frogs from inside the Party Wagon, and played. I owned none of the actual Ninja Turtle figurines, so the frogs would have to do.

In the animated series, the Turtles Party Wagon has a removable roof they use as a springboard to launch the four brothers into the air. Following the cartoon depiction, my Party Wagon also had a flippable roof. The idea was to launch the frogs from the Party Wagon, reenacting their battles with the Turtles’ nemesis—the Foot Clan.

The small frog I placed on the roof hopped off several times, but eventually tired of the tiny human scooping him up and saying, “Stay put. It’s Turtle Time.” Raising my hand high, I came down quickly, connecting with the end of the roof, which spring-boarded the frog high in the air. I smiled in awe as the frog rose so high I had to shield my eyes from the sun. Then gravity kicked in and the poor creature fell at a rapid rate toward the concrete, landing with a splat.

I couldn’t tell if I’d killed the frog. He wasn’t moving as I poked, then begged him to get up. I rolled the green amphibian onto his back and his legs spread wide. Panic set in. I scooped up the frog to blow on him, like God breathing life into Adam. No reaction. In the biblical narrative of Cain and Abel, Cain tries to disguise the murder of his younger brother. Cain’s mindset became clear as I continued to blow on the frog: Hide your sin. I walked to the air conditioning unit, which was still pumping a low whirl of hot air. The frog would fit through the rusted hole; all I needed to do was drop its body into the spinning blades.

I hesitated as my chest tightened. What I was doing was wrong. No one had ever explained why, but I knew.

The tightness spread, but didn’t stop me. Instead, I turned my hand over and watched the frog explode into pink mist. The cracks in the dam broke. Water ravaged the landscape, and I burst into tears. Then I ran home—tears blotting my vision—vowing to tell no one what I’d done.

And I didn’t. Until now.

The bustling diner bleeds hipster. A gray funnel on the ceiling looms over burnt orange cushions while waiters bustle from table to table, their uniform more of an homage to auto mechanics than waitstaff. I plop onto the orange cushion while my writing mentor, Josh, slides into a tall charcoal chair.

It’s been a year since we’ve seen one another, yet we pick up our conversation instantly, like old men resuming a game of chess started the day before. He grins and asks, “So, how the hell are you, man?”

My daughter likes to read a story about a sly fox eating a gingerbread man, and like the fox, I play coy. “Life is good. I’m writing more. Parenthood can be frustrating. My wife and I attended a Marriage Bootcamp, and that was a struggle.” I’m peeking over the bricks I’ve stacked to ensure the wall is still in place. If he can see over the wall—just enough to peek into the vulnerable space—he’ll believe me. But the truth? I’m growing angrier every day. I called my daughter a troll at a birthday party while other parents eyed me like I was a miscreant. I’m so burned out I’m not emotionally available for anyone. But no, really, life’s good.

We pretend we’re “just okay” when we have antennae stabbing us in the back.

Josh has this habit of staring too intently. It’s as if he’s peering into your soul. He’s known me over a decade now, so he knows I’m lying. Later that night, he’ll share with a room full of people how he lied most of his life too. Dad was an alcoholic. Both parents were hoarders. They had 19 cats, and when one died, his dad would toss newspaper over the corpse. If someone had given him a movie script, Josh’s role would have been “white male who’s just okay,” given how long he pretended.

Josh continues to stare, glimpsing beyond the bricks into the truth. He’s performed this magic trick once before when I came home from Iraq. Even then, he saw the weight I carried in my eyes.

During my time in Iraq, I discovered just how much weight soldiers actually carry. My body armor and ammo weighed 70 pounds. During a clearing operation one night, I walked miles in the armor with an additional 55-pound rucksack on my back. I’d stepped on the scale, laughing at the absurdity of men fighting a war when they can’t move. But move I did, for hours and days. By day three, my back, legs, and shoulders were sharp lashings of fire. Never mind the emotional pain, I stuffed that. There was a war to fight after all. Embrace the suck. A trick I’d used to embrace the suck is to remind myself the environment could be worse. I focused on an old story I’d heard.

Personal photo from author while on mission (wearing 70 lbs of armor and ammo)

As the story goes, a radio operator much like me had been carrying a heavy pack. Throughout the march, his lower back screamed in protest. He continued to carry the weight, pushing through as his uniform soaked every drop of sweat. When he grew dizzy, he stopped to rest. Once he finally passed out, a medic discovered the radio antenna had broken, stabbing the soldier in his back to create a slow drizzle of blood he’d mistook as sweat. When they removed the radio pack and the antenna, blood came gushing from the wound. The radioman nearly bled out.

Once Josh is through staring a little too much—like the medic—he notices the heavy weight I’m carrying and the blood. He reaches for the backpack and yanks the antenna free from my back. He leans forward and stretches his hand across the table.

“Ben, vulnerable stories spare other people shame.”

The blood gushes, the dam breaks, and I’m a child again killing frogs under the hot sun, trying to hide my tears.

Gustave Doré—The fourth Horseman, Death on the Pale Horse (1865) | Wikimedia Commons

My grandmother died on March 28, 2019. We weren’t close toward the end. For most of my adult life, I vacillated between feeling guilty that I hadn’t visited and angry that she put in little effort to visit me. She developed Alzheimer’s late in her life and didn’t remember my visits, so when I’d call—and she didn’t remember me visiting—her words cut. I knew it wasn’t her fault, I knew this was a disease that deteriorated the mind, but I was convinced she was still in there somewhere. “Poor old Mammaw,” she’d lament on the phone, and I’d check my savings that evening to see if my family could afford a visit by cutting down to beans and rice. Flights would cost $1,500, so when reality set in, so did the shame.

We’re the boys, ashamed of the past, who believe redemption is for someone else.

When she died, there was the guilt of relief and the pain of loss. The entire day was a battle between my head and heart, two tanks in a game of tug-of-war. A day prior to her death, you would have found me throwing household objects, raving mad. Between my breakfast with Josh and her death, the hurricane reached the shore and the moment I feared finally arrived: I snapped.

When I was growing up, my mother warned me of my temper. When I joined the Army, instead of snuffing the flame my mom tried to quell, my drill instructors taught me the power of a wildfire. The angrier I was, the more powerful. I could sustain injury and keep fighting. I wouldn’t hesitate to pull the trigger.

“Kill! Kill! Kill without mercy!” I would yell in cadence with other soldiers as we stabbed dummies.

Many men find themselves in a similar place; anger helps us weather injury and stuff the emotional roller coaster we sometimes feel. We don’t tell our friends, and we certainly don’t tell our wives. We tell no one. The chorus of voices in our heads that scream for us to keep our mouths shut is enough torment already.

I bet you know that voice, too, the one that whispers, “That’s stupid… you’re stupid.”

We pretend we’re “just okay” when we have antennae stabbing us in the back. We’re the children who accidentally murdered frogs, convinced we’re still our sins. We’re the boys, ashamed of the past, who believe redemption is for someone else. We’re the students begging to connect with society but feeling more alone than ever. We’re the men who’ve fallen off their white horses, hemorrhaging and bloated, pretending we haven’t slipped.

In apocalyptic literature, one of the Four Horsemen—Death—rides a pale horse. I’ve often wondered how the rider and horse became so. In the novel The Lord of the Rings, similar figures to the pale rider are called Ringwraiths. According to lore, they were once kings and warriors of old until the rings they received from the dark lord Sauron enslaved them. These once great kings become nothing more than walking phantoms carrying out dark deeds.

The story makes me wonder if the pale rider of death is nothing more than a man who gave into the belief he must continue to ride his white horse, bleeding and broken, into battle over and over—never to admit defeat or fall off.

Perhaps that’s why we close ourselves off. Young and free, we once rode a white horse, but now the beast is mangled and bloody. We continue to ride, refusing aid, until the white horse grows pale, its decay ushering death. The plague spreads to our fellow men who follow in step, all the while refusing to admit they’re bleeding. We wish more of our friends and loved ones could see the trickle of blood in our sweat-stained uniforms, or the boy crying next to an air conditioning unit, but everyone else is riding the same dead horse. We keep climbing onto that half-dead animal’s jagged spine, scythe in hand.

Some days I embrace the lie—I must be strong and never bleed openly. Some years, I ride the putrid mare, tattered black cloak fluttering behind me, guiding my own personal apocalypse.

Tomorrow, I might even climb back onto my pale horse.

But not today.

By Benjamin Sledge

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Collection – 4 Key Factors To Building A Profitable Portfolio

Portfolio management means different things to different people but, in general, it is a way of balancing risks and rewards. And while the goal of any investment strategy seems straightforward – make money – it often depends on an investor’s circumstances.

For example, a young person who is new to the full-time workforce might reasonably expect his investment portfolio to grow and provide him with a nest egg when he retires. Conversely, an older worker may simply want to hold on to what she has already accumulated. To satisfy the desires of both types of investors (along with the desires of others) individualized approaches are needed. Here we look at some ways to measure and improve portfolio Performance.

Measuring Return on Investment (ROI)

The most elemental measurement of a portfolio’s performance is the return on investment, or ROI. By knowing what each dollar invested is likely to yield, individuals can more effectively formulate a logical money-management strategy.

ROI = (Gains – Cost)/Cost

Of course, ROI depends on the types of securities an investor chooses to hold, and this can change as market conditions improve or worsen. Typically, the higher the potential ROI, the higher the risk and vice-versa. Therefore, controlling risk is one of the primary functions of sound portfolio management.

Measuring Risk

Because risk and reward are, in essence, two sides of the same coin, one’s tolerance of the former tends to influence or even dictate the latter. For example, if a person seeks to maintain, rather than grow her current assets, she may want only safe and secure investments in her portfolio. But what is “safe and secure” and how can such an objective be achieved?

Generally, there are two ways to mitigate investment risk and still trump the prevailing inflation rate. The first is by carefully selecting securities, as some are riskier than others. While an investor may hit a home run by purchasing a favorite penny stock, there’s always the possibility he’ll strike out. Conversely, a government bond may not offer the opportunity to trot around the bases often, but it’s not likely to get you tossed out of the game either.

One way to assess risk is by determining the beta of the security under consideration. A beta of 1 indicates that the stock value typically rises and falls in conjunction with the market. Higher and lower betas indicate more or less divergence from the respective market averages.

Another, more complex, means of evaluating risk is via the Sharpe ratio, which measures risk-adjusted performance by subtracting a risk-free rate, like the 10-year U.S. Treasury bond, from one’s investment returns and dividing the result by the standard deviation of those returns. The greater the ratio, the better the risk-adjusted performance is said to be.

Regardless of how one chooses to quantify it (other methods include alpha, r-squared and simple standard deviation calculations), risk boils down to price volatility; hence, the second, and perhaps most popular, a method of minimizing risk is through diversification.

It’s no secret that securities like gold and silver typically perform well during market downturns, while others, like technology stocks, do better when the market is surging. By balancing holdings to hedge against different market conditions, investors can achieve relative portfolio stability – even with highly volatile individual investment vehicles.

Getting Diversified

While diversification is good, there is danger in over-diversifying. The whole point of a varied portfolio is to smooth out the peak-and-valley pricing effects brought about by normal market fluctuations and combat longer-term stock/market downturns. Anything beyond that can quickly become counterproductive, as curbing downside risks also involves stifling upside potential.

This middling effect can be easily understood by considering a portfolio comprised solely and equally of the aforementioned gold/silver stocks and technology stocks. In theory, the gold/silver stocks will perform well in bearish markets and not so well in bullish markets, with the reverse holding for the technology stocks. Of course, the net result is a stagnant portfolio, with gains in one area, offset by losses in another area.

Avoiding the Lottery Effect

Even worse than a diversity-gone-wild portfolio is one overly reliant on high-risk, high-return investments – even if they are varied and have proved (as much as that is possible) to offer a positive expectation in the long run. The reason for this is simple: The more speculative the investment, the more likely that A) The promised gains won’t materialize, or B) The investor is faced with a liquidity crisis that requires selling the holdings prematurely and at a loss.

Things to Consider

So, when deciding on the right portfolio blend, keep these things in mind:
1. Goals – Exactly what is it that you are trying to accomplish? Is your objective to accumulate wealth or to hold on to what you already have?

2. Risk Tolerance – How do you handle the day-to-day fluctuations of the market and the consequent rise and fall of your net worth? If you are prone to wild reactions, like checking the sky for swarms of locusts every time your portfolio loses value, it might behoove you to find more stable investments. True, it might take you longer to reach some of the financial goals you’ve set, but at least you’ll sleep at night … and the crops will be safe.

3. Own What You Know – Often it helps to invest in businesses and industries that you know something about. Acme Widgets may have had a great fourth quarter, but if you know nothing about the widget industry, how do you know that the company will continue to be successful? For that matter, how do you know that people will still be using widgets five to 10 years from now? Information about a specific business or industry doesn’t necessarily provide the answers to these questions, but it sure doesn’t hurt.

4. When to Buy/Sell – If the stock market has taught us anything recently, it is that Kenny Rogers was right: “You gotta know when to hold ‘em, know when to fold ‘em.” Every purchase you make should have a purpose, and you should constantly re-evaluate that purpose according to the market and other conditions.

The Bottom Line

By thoroughly understanding and articulating your monetary goals and being an active participant in your financial planning, it’s possible to grow your investment portfolio safely and steadily – without growing any (more) gray hairs in the process.


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Collection – Start me up: Where mobility investments are going

Our latest mobility start-up and investment tally shows the industry invested $120 billion in the last 24 months as it prepares for the years to come.

The automotive industry is shifting into gear as a broader definition of mobility takes hold. Driven by the four ACES trends—autonomous driving, connected cars, electrified vehicles, and smart mobility—automotive OEMs, suppliers, and new entrants such as tech players and venture capitalists are attempting to build strongholds in the emerging mobility ecosystem.

We estimate that securing a strong position across all four areas would cost a single player an estimated $70 billion through 2030. It’s doubtful any individual OEM could shoulder this level of investment alone, which is why partnerships and targeted acquisitions offer an attractive strategy for staying ahead of competitors.

Investments continue to grow strongly

Investments in new mobility start-ups have increased significantly (Exhibit 1). Since 2010, investors have poured $220 billion into more than 1,100 companies across ten technology clusters. Investors invested the first $100 billion of these funds by mid-2016 and the rest thereafter. For this update on our Start-up and Investment Landscape Analysis (SILA) report, we have broadened our definitions, refined the analysis, and fine-tuned our approach (see sidebar, “Methodology,” for more on what’s changed since our first article).

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One measure of how dramatically investments have grown involves a comparison of the periods 2010–13 and 2014–18, when average investments across all technologies jumped sevenfold (Exhibit 2). Our analysis reveals that more than half of the investment volume comes from large investments with transaction values greater than $1 billion—these are industry-shaping moves and include the mergers and acquisitions (M&A) of established companies.

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Another clear trend is the tech-company challenge to incumbent automotive players on mobility: these nonautomotive players, together with venture capitalists and private-equity firms, are responsible for over 90 percent of the investments in the mobility space.

Furthermore, we identified another strong acceleration of investments in e-hailing players, mainly driven by large investments in top players. This indicates that investors expect a high return on investment. These investments, however, need to be seen in conjunction with those in autonomous driving (with a number of players active in both areas). Autonomous driving can be seen as the endgame of e-hailing, potentially also being the road to (greater) profitability of these solutions.

We also noted several other investment highlights in 2018. For instance, the latest transactions involving Cruise, the autonomous-driving unit of General Motors, reveal a post-money valuation (a company’s value after it adds capital contributions and outside financing to its balance sheet) of $14.6 billion. That alone is responsible for roughly a third of GM’s overall valuation on the public market.

What’s more, Cruise and Honda are collaborating on a purpose-built autonomous vehicle. Honda will devote $2 billion to the effort over 12 years and make an additional $750 million equity investment in Cruise. In May 2018, SoftBank Vision Fund made a $2.25 billion investment in Cruise, split into $900 million at closing and $1.35 billion when GM is ready to deploy its autonomous cars for commercial use. Furthermore, SoftBank invested an additional $0.94 billion in

But autonomous-driving firms were not the only ones to collect significant funds: Grab, a Southeast Asian ride-hailing service, received $2 billion in new capital from investors including Toyota, which contributed $1 billion, and SoftBank, which invested $500 million. Grab’s current value is north of $10 billion.

What’s new in the past 12 months—a few highlights

Beyond the overarching development, we have built on our existing analysis to deepen it in selected areas, for instance, considering patent activity, shared micromobility, the rising cost of technology, regional expansion, and other topics.

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  • Patent activity favors incumbents. In addition to investments, which offer one lens on mobility-market dynamics but do not capture internal company outlays, we also examined technology patents along the ACES clusters (Exhibit 3). We found that battery and charging technologies account for about half of the relevant patents issued but only 20 percent of company investments. That probably means many large companies do this work in-house via their own research departments. Comparatively, e-hailing services show the lowest number of patents issued, likely because differentiation in this cluster is driven more by network effects and less by technology. Traditional automotive players make up less than 10 percent of all investments but issue about 85 percent of relevant patents—an indication they invest more in internal research and development than in inorganic growth.
  • Shared micromobility debuts. Micromobility companies1increased their investments by a factor of more than five from 2014 to 2018. Total investments now significantly exceed $1 billion, with an average investment of about $100 million per transaction in 2018. That’s comparable to the combined investments in telematics, intelligent traffic systems, and the peer-to-peer space, although the average investment amount is two to three times as high. This investment intensity could support a view that sees it as a supplement to the future e-hailing market (among others), driven by the transition from station-based vehicle sharing to free-floating services.
  • Technology is becoming more expensive. The median investment amount for relatively smaller deals (less than $100 million investment volume) has increased two- to threefold since 2013, suggesting that the average cost of technology increased in recent years. This could indicate a maturing of the technology toward industrialization and deployment, as well as an overall increase in the cost of participating in the race for ACES technology.
  • The regional split is lopsided. Over a third of the overall investment in mobility went to companies in the United States, followed by China ($51 billion), the United Kingdom ($34 billion), and Israel ($18.5 billion, where $17.4 billion comes from investments into Mobileye). The next-highest European country is France, in tenth position. Even though the European Union (EU), excluding the United Kingdom, receives only 5 percent of global funding, it contains 19 percent of all identified companies (Exhibit 4). Thus, average investment sums in Europe remain far behind those in the United States and China. This breakdown is similar when looking at the source of money as opposed to the recipients: the top investors come from the United States, Japan, and China, while the largest investor in the European Union is Germany, at only $4 billion.
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  • SoftBank is heavily invested. Japanese tech player SoftBank has invested about $30 billion in automotive ACES trends to date, with a focus on autonomous driving and e-hailing. With its recent investment in Cruise and, SoftBank now has a stake of more than $9 billion in autonomous driving, making it a strong player in the mobility space. An additional $30 billion has been invested in the semiconductor business, with significant exposure to future-of-mobility topics, in particular the hardware to bring about autonomous driving.
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  • Tech-company valuations outpace incumbents. Comparing today’s valuations to those of 2010 shows the total market capitalization of traditional OEMs decreased by more than 10 percent. Meanwhile, tech players in the automotive space—such as Tesla, Uber, and Waymo—increased strongly and are now even higher than the valuations of traditional OEMs (Exhibit 5). Uber’s recent valuation of more than $70 billion makes it more valuable than traditional premium OEMs such as BMW or Daimler. And although traditional OEMs invest less in inorganic moves, they still hold a strong position in the ACES trends based on their patents and massive R&D expenses.

Follow the money! As the mobility transformation gathers momentum, investors are clearly targeting the four ACES trends—autonomous driving, connectivity, electrification, and smart mobility—thus providing a concrete measure of the scale and scope of change on the horizon. Our analysis also shows that tech players are significantly more active in external technology investments than established automotive players, who have traditionally made most of their technology investments in-house.

By Daniel Holland-Letz, Matthias Kässer, Benedikt Kloss, and Thibaut Müller

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Collection – ‘Cooperate or stop criticising’, China’s foreign minister Wang Yi says as belt and road summit nears

  • Beijing’s global trade plan is a platform for cooperation, not a tool to boost geopolitical influence, diplomat says
  • 40 heads of state, representatives of 150 countries set to take part in global conference from April 25-27

China’s Foreign Minister Wang Yi appealed to nations to cooperate on the belt and road plan, not just criticise it. Photo: AFP

The “Belt and Road Initiative” is a platform for cooperation and not a geopolitical tool, China’s foreign minister said on Friday, as he urged the United States and India, two of the scheme’s biggest sceptics, to take part in it.
Speaking at a press conference ahead of the second Belt and Road Forum, State Councillor and Foreign Minister Wang Yi also issued a thinly veil rebuke to Washington, saying it should not prevent other countries from taking part in Beijing’s plan for boosting global trade and connectivity.
The upcoming three-day conference, which opens on Thursday, is expected to attract about 40 foreign leaders – up from 29 at the inaugural summit in 2017 – and 5,000 foreign representatives from 150 countries.

Amid growing criticism of the plan, Wang sought to dispel concerns it was being used by Beijing to promote its global ambitions or was creating debt traps for host nations.

“The ‘Belt and Road Initiative’ is not a geopolitical tool but a platform for cooperation,” he said. “We welcome all parties to take part in it.”

Among those expected to attend next week’s summit are Russian President Vladimir Putin, Pakistani Prime Minister Imran Khan, the 10 Asean (Association of Southeast Asian Nations) heads of state, and the leaders of Italy, Austria, Switzerland, France, and several African and Central Asian countries.

The United States will send only low-level representatives – mostly state-level officials and business representatives – to the event while India has refused to attend in part because of a China-led belt and road project in Pakistan that passes through the Pakistan-administered section of the disputed Kashmir region.

Wang said 126 countries and 29 international organisations had signed documents expressing their support for the scheme.

He said also that while opportunities to cooperate were open to all, nations that are opposed to the belt and road plan should not seek to influence the opinions of others.

“All countries have the freedom to participate, but they don’t have the right to prevent other countries from taking part,” he said. “We hope that more countries, including the United States, can actively participate in the ‘Belt and Road Initiative’.”

The US has been particularly critical of Italy’s participation in the scheme, with Secretary of State Mike Pompeo saying that Washington was “disappointed” and “saddened” by Rome’s decision.

Next week’s forum will open with a series of panels, including a meeting for business leaders, on Thursday. Chinese President Xi Jinping will give a keynote speech on Friday and host a leaders’ round table on Saturday.

The event would conclude with a joint communique expressing the participating countries’ political commitment to the initiative, Wang said.

After winning the election a year ago, Malaysia PM Mahathir Mohamad made good with a vow to review the East Coast Rail Link agreement and the Chinese contractor has been receptive to his wishes. Photo: Joshua Lee

Beijing’s “Belt and Road Initiative” has always been about common development and prosperity through improving connectivity between nations. Any scheme on such a massive scale is bound to require reassessment from time to time and that is what has taken place with a rail project on Malaysia’s east coast. A revised deal has been negotiated, lowering the cost and offering other benefits. A positive message has been sent as dozens of government and business leaders prepare to meet later this month for the second belt and road forum.

It is a far cry from claims in the West that Chinese aims are less than they seem and the initiative is about power projection and influence and a likely “debt trap” for some of the 125 countries that have signed cooperation agreements. Malaysia’s prime minister, Mahathir Mohamad, had long expressed concerns about the rail project, approved by his predecessor Najib Razak, who faces a slew of corruption charges. After winning the election a year ago, Mahathir made good with a vow to review the agreement and the Chinese contractor, China Communications Construction Company, has been receptive to his wishes. The track linking the east coast to the busy waterway of the Malacca Strait at Klang in the west has been reduced by more than 30 per cent through the length being shortened 40km to 648km, the firm agreeing to bear some of the maintenance and operating risks and the percentage of local participation in civil works being raised from 30 to 40 per cent.

Malaysia to ‘take advantage’ of rail link deal to sell China palm oil. Mahathir now hopes the new contract will be grounds for China to buy more Malaysian palm oil. Work on the rail line, suspended while talks took place, is expected to resume next month and it is scheduled to open in 2026. Such a positive outcome is not in line with the claims of the doomsayers, who had pointed to the construction of a port in Sri Lanka taken over by a Chinese firm on a 99-year lease due to non-payment of loans as evidence of Beijing’s real intentions. They had similar predictions for a host of other belt and road schemes and United States President Donald Trump’s administration had seized on the issue of debt to try to dissuade governments from joining.

But the renegotiated rail deal negates such positions. Beijing and Chinese firms have learned much about the challenges of implementing the initiative since it was announced by President Xi Jinping almost six years ago. They better understand the difficulties faced by developing countries and the complexities of democracies. Belt and road goals have not changed and governments in Asia, Africa, the Middle East and elsewhere remain dedicated to the initiative; the shared commitment and infrastructure that is being built and the resultant trade and investment are proof enough.

By Catherine Wong  

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Collection – The easy decision for Indonesian farmers between palm oil and rice production

Many Indonesians remember a time of rice paddy fields with rows of women applying traditional cold powder on their face to avoid sunburn. This portrait is slowly disappearing. Agricultural household heads — who never noticed how much a kilo of rice costs thanks to their self-sufficiency — are now aware of it. Many in recent years have stopped cultivating their paddy fields and now buy rice in the market. At the same time, many farmers have shifted from rice to palm oil production. What factors are driving this shift and what are the implications?

Workers spread rice grains during a drying process after a harvest at Pontang village in Serang, Banten province, Indonesia, 26 April 2018 (Photo: Reuters/Beawiharta).

Statistics Indonesia (BPS) data shows that rice production surpassed its consumption, rendering a surplus of about 2.85 million tonnes in 2018. Wholesale data has shown a 10 per cent increase in the last three years from 10,915 Indonesian rupiah (US$0.78) per kilogram in 2015 to 12,054 Indonesian rupiah (US$0.86) in 2018. This steady hike reflects a growing dependency on rice sold in the market.

Disruption in the subsistence system of rice at the household level consequently brings more problems to food security. Many paddy fields in Jambi province, for instance, are left abandoned. This is also where palm oil is gaining increasing popularity among farmers. The choice of producing palm oil is not without reason.

At the micro-level, households continuing to plant rice are encountering labour constraints. Farmers used to apply a communal rotating system, where households worked together to plant one plot before moving to another, ensuring planting was done before the rainy season’s end. This system of reciprocal and mutual assistance gradually disappeared as community obligation loosened and households increasingly worked independently.

Hiring labourers means more working capital has to be made ready in addition to seed, fertiliser and pesticide capital. This is less of a problem with palm oil, as farmers can easily borrow from palm fruit traders to be paid after harvest time.

At the macro-level, the expansion of big plantations and processing industries near villages further intensifies the labour constraints faced by household producers. Labour allocation becomes more complicated as labourers prefer working in industrial plantations rather than village or household paddy fields.

Avoiding risk, these farmers enjoy secured incomes as employees. Proximity to these processing industries brings further security to palm oil farmers. This is why it is not easy for farmers to switch to other crops, such as durian, whose markets are more uncertain, even when the President encourages them to.

A further attraction for farmers from the macro-level perspective is that palm oil prices tended to be stable, particularly relative to other estate crops like rubber and coconut. Meanwhile the price of rice is intentionally kept affordable for consumers. Consequently the incentives to be rice consumers, rather than rice producers, are greater.

At the global level, climate change has complicated matters further by taking a toll on rice production. Farmers are observing more frequent and more severe weather events, such as prolonged droughts and floods. These lead increased humidity, causing more pests and diseases. Climate change also adds difficulty in predicting the beginning of the rainy season and causes disruptions to planting patterns.

Estate crops are relatively less susceptible to climate change in contrast to food crops, palm oil harvests are less affected by prolonged droughts and floods. Palm oil farmers do not have to worry about minor seasonal shifts. Meanwhile rice production is highly sensitive, often costing total losses and failed harvests. This, added with the micro-level and macro-level issues, explains why rice production is no longer attractive, even at the subsistence level.

The total area of palm oil household-level smallholders has grown significantly, almost 27 per cent in the last three years, from 4.42 million hectares in 2014 to 5.61 million in 2017. This is more than three times greater than the increase in private estate farms. In September 2018 a Presidential Decree temporarily froze the permit of new private estates. But this moratorium will not affect the  expansion of smallholders — they are not the target of the decree. Yet events at the global level would certainly have an effect on them, directly or indirectly, including the EU plan to ban biofuel palm oil imports.

Three policy issues are on the table: food security, failed harvests, and future price slumps as palm oil farmer numbers continue to rise. The government has contemplated constructing new paddy fields for extensification — instead of intensification — to strengthen food security. But unless the growing failed harvests problem is addressed, the construction of more paddy fields is ineffective.

Following the 2014 Suryana report, the optimal policy option to counter climate change-burdened harvests is to invest in resistant seeds and to educate farmers in efficient water management.

The agricultural industry also has to empower farmers by eliciting their critical thinking. While the price of palm oil has been more attractive compared to rice, what happens if they all plant it?

Farmers must protect their livelihoods by putting their eggs in different baskets.

Authors: Palmira Permata Bachtiar and Asep Suryahadi

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Note – McKinsey: Battery storage is cooler than it sounds. Trust us.

This week, battery storage gets even more versatile, and a McKinsey on China podcast explores opportunities amid slower growth. Plus, we resurface a terrific 2007 interview with strategy expert Richard Rumelt, in which he describes how Steve Jobs took a successful “predatory leap.”
soloar energy panels
What’s more exciting than battery storage? If you said “a lot,” you’ve been missing out on the market’s breakneck, if somewhat stealth, expansion over the past few years.
Here are some basics: an energy-storage device stores energy for later use. Obvious enough. It can power electric and hybrid vehicles, as well as billions of smartphones and other electronics. And then there are batteries as big as shipping containers. These guys aren’t holding volts for your emergency flashlight; they power data centers, hospitals, universities, hotels, restaurants, retail stores, and more. And they’ve got a particularly neat trick, which is they store energy when prices are low and release it when they are high. Exciting, indeed.
Storage can be deployed both on the grid and at an individual’s home or business. A complex technology, its economics are shaped by a variety of factors: customer type, location, grid needs, regulations, customer load shape, rate structure, and nature of application. Recently, some local utilities have established programs to pay residential energy-storage owners for feeding power from their batteries to the grid during peak demand periods. In return, customers receive compensation, such as a credit on their utility bill. As electric utilities grapple with systemic shifts, especially changes to rate structures, energy storage will also come into play.
The implications are big for the electric-vehicle market, which was slow to take off because charging stations were too few and far between. Now battery storage is changing that. And it’s making waves in the power sector. With prices dropping faster than anyone expected—battery-pack costs were recently $230 per kilowatt-hour, down from $1,000—battery storage is playing a bigger role in energy markets, moving from niche uses like grid balancing to broader ones such as replacing conventional power generators for reliability, providing power-quality services, and supporting renewables integration. And as the rise of renewables—solar and wind—continues, so will the need to store all that decarbonized electricity.
Cost has been plummeting for a few reasons: global demand for consumer electronics and electric vehicles spurred investments in battery-pack manufacturing. Other hardware such as inverters, containers, and climate-control equipment also got cheaper, thanks to design advances and efficiency gains in manufacturing and supply-chain management.
And “soft” costs (customer acquisition, permitting, and interconnection, among others), have dropped too. Experts forecast costs will fall another 50 to 70 percent by 2025, meaning players in the market, from storage developers to system integrators, should move fast.

McKinsey & Company