Newsletter 4-2-2021

Hi everyone. Thanks for subscribing. If you have the means, please consider becoming a paying member. If you have the inclination, please pass this newsletter around to others who might enjoy the read. Now onto this week's edition of No Craic, Mad Craic, and Great Craic.

No Craic

(1) Microsoft has secured a $21.88 billion, ten-year contract to provide the U.S. Army with augmented reality (AR) headsets. According to the PR-men and women employed by the firm and the Pentagon, the wee upstarts out of Seattle will customize their standard-issue HoloLens technology to "keep soldiers safer and make them more effective...deliver(ing) enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios." With all the self-seriousness and delusion one might expect, Microsoft CEO Satya Nadella justified making this deal (and bucking the will of his workforce, who are none too keen on becoming defense contractors) by claiming "we made a principled decision that we're not going to withhold technology from institutions that we have elected in democracies to protect the freedoms we enjoy."

Microsoft sure has come a long way since Windows 95, and deserves to now be counted as one of the largest beneficiaries of the American contractor state. It was only back in 2019, after all, that the company won itself a $10 billion contract to provide the Defense Department with cloud services.

(2) Speaking of defense contractors, Lockheed Martin is trying to sell anti-trust regulators on the legitimacy of a recent acquisition by presenting its purchase as essential to the United States' capacity to compete with China.

As covered by Eli Clifton, olde Lockheed has recently bought the rocket engine manufacturer Aerojet Rocketdyne for $4.4 billion. Though this move, if permitted, will further consolidate an already consolidated missile industry, donning his patriot's cape, Lockheed CEO James Taiclet posits it is necessary all the same: as China's weapons makers are vertically integrated, he argues that the United States must encourage vertical integration as well if it wants to keep up. In Taiclet's framing, "it's critical that [decisions by regulators] look through the lens of great power competition and how we compare to the defense industrial base certainly of China."

(Here, it may be pertinent to point out that defense spending in the United States for 2019 exceeded the combined defense expenditures of China, India, Germany, France, Saudi Arabia, Japan, South Korea, Russia, and Brazil).

In a turn few could have expected, Taiclet's thesis has won the support of the chairman of the House Armed Services Committee Howard McKeon. One may be curious to learn that McKeon is the (former and future) CEO of the McKeon Group, which has long subcontracted for Lockheed.

(3) The United States is experiencing yet another wave of mass shootings; government is likely to take traditional remedial steps of bemoaning the event and then doing nothing.

A tidbit typically ignored in the public discourse when it comes to these recurring tragedies is that more than a third of American mass shooters in contemporary times have been trained by the U.S. military. You combine preexisting mental health issues with training, war-time trauma, and the easy availability of weapons and it isn't hard to see how these numbers have come about.

(4) Blackrock's former Chief Investment Officer for Sustainable Investing Tariq Fancy is calling shenanigans on the whole greening of Wall Street stuff. In his words, "I have looked inside the machine and I can tell you business does not have this...Not because these are bad people but because they run for-profit machines that will operate exactly as you would expect them to do." So long as fiduciary responsibilities to shareholders and clients trump everything else--and so long as no meaningful regulatory infrastructure is in place--Fancy suggests this whole initiative reduces to a public relations initiative.

Alas, green investment's problems do not end with the structural issues identified by Fancy. Enormous dangers are also presented by government attempts to "derisk" investment into climate friendly sectors. As the wonderful Daniela Gabor has discussed, these efforts in incentivizing financial actors to do good result in states and central banks potentially absorbing enormous future expenses--expenses that will threaten to precipitate full-on fiscal crises should they materialize.

Eeks.

(5) Iraq and Saudi Arabia are cozying up. Following Iraqi Prime Minister Mustafa al Kadhimi's visit to the Kingdom, Muhammad bin Salman announced he will allocate $3 billion into a new joint fund to "spur development in the (Iraqi) private sector", and that the two countries will cooperate on matters of economic diversification and private sector development.

If I know Saudi investment strategies, these capital flows are likely to be steered into real estate speculation and other developmentally (and socially) useless ventures. To the extent that brave Iraqi protestors have been chanting "the people, want, the construction of a nonsensical vanity project we shall call Iraqi Neom", I'm sure this will do the trick in finally bringing their country stability and prosperity.

We'll need to wait and see if the moneys referenced above set the stage for Saudi's acquisition of assets in Iraq's energy sector, and for the tightening of the financial dependencies already binding much of the MENA region to the GCC countries.

(6) Jason Hickel, Dylan Sullivan, and Huzaifa Zoomkawala have just published a major piece for New Political Economy, detailing, amongst other things, the global north's continued plundering of the global south in the post-colonial era. According to their calculations, unequal exchange between 1960 and 2018 has resulted in $62 trillion being drained from the global south, a figure which translates into growth losses of $152 trillion. The authors also note that these outward flows greatly accelerated in the 1980s and 1990s, when structural adjustment programs forced many developing countries into liberalizing and opening their economies.

(7) Fahad al-Sudaid and the Synaps Network have produced a deeply insightful study into the Lebanese healthcare system. Offering a lens into the broader social, political, and economic pathologies that have brought Lebanon's people to their knees in recent times, it is a must-read for all those who care for the country.  

Mad Craic

(8) Laleh Khalili has written up a great (and brief) history on all the drama going down in the Suez Canal for Developing Economics and The Washington Post.

As she details, it was the eight-month closure of the canal in 1956 (and the eight-year closure post-1967) that prompted the shipping industry to build up huge ships like the Ever Given in the first instance. (In short, the industry sought to compensate for the losses in delivery time that were introduced by the closing of the canal--a closing that forced those transporting oil from the Middle East to Europe to take the scenic route around the Cape of Good Hope--by constructing these ultra large carriers capable of ferrying far more product in one go). Decades later, with some irony I suppose, it would be one of these big fellas that wound up blocking the Canal for nearly a week.

Great Craic

(9) The wonderful team at Noria Research have worked tirelessly to help bring my work on the US-UAE relationship to print. I think (hope?) it makes for interesting and important reading, so please check it out if you can.

(10) Two great animal videos to close the week out.

(i) First, you have some great parenting by this mama bear:

(ii) Then, you've got what looks to be an otter heroically pulling up another otter that was unable to make the jump needed to clear a wall:

Have a great weekend.