Chicken - Inconsistent with the UK's Brand

“So do you have a view?"

- a job interview the other week

I’ve become convinced British Prime Minister Theresa May is playing chicken.

The other day, the Tories (Conservative) held their party conference where May declared an end to austerity, called for a softer Brexit and declared that “there are better days ahead.” I fundamentally don’t understand how this can be true given the mindset of its leaders across both parties, an ugly superiority complex fundamental to national identity that the country has failed to shake since the dissolution of the Empire, and a general failure to grow.

The United Kingdom has a mandate to withdraw from the European Union before March 29, 2019.

No trade deals have been secured. Multinationals continue to switch the headquarters of their European operations to the mainland. The future of the border with Ireland (a member of both the EU and the common market - though not Schengen) has not been resolved.

They don’t have the necessary legal framework to even have a moderate degree of success here. May’s only plan for Brexit seems to be for her and her party’s inaction to prompt a redo of the whole referendum because the consequences otherwise would be so severe.

May isn’t the British leader with a destructive mindset. In her own party, former mayor of London and Home Secretary (British equivalent to Secretary of State) Boris Johnson sews discontent with dreams of a crisis in which he can become a modern day Churchill, and resignations have been manifold in the Cabinet.

The opposition party too is in disarray. Labor party’s leader Jeremy Corbyn is mired in an ugly string of anti-Semitic allegations, reshuffles and resignations have been extremely common in the Shadow Cabinet over the last two years and Sadiq Khan’s (the current mayor of London) government has just filed a judicial review claim regarding a planned third runway at Heathrow – this is desperately needed: London’s other major airport Gatwick is the busiest single runway airport in the world and both airports already operate over capacity.

British growth for the past three decades has been buoyed by an influx of foreign money seeking stability. Russian, Arab and African capital flows employ the ice cream scoopers at Harrods, builders of investment properties far beyond the Green Belt, and countless humble Bentley, Lamborghini, and Porsche dealers. London and a good chunk of the rest of the United Kingdom have built their economy on being a safe harbor. If Britain continues to coast on the basis of stability its leaders are actively undermining at the highest level, the music will stop and the money will move (perhaps to the US — though we have a case the same disease with less intensity, maybe to Canada — look at Chinese capital in Vancouver –, Singapore, or the Nordic countries).

Related reading:

The expansion of Heathrow is estimated to create up to 180,000 jobs and up to £187 billion in economic benefits across the UK by 2050

Heathrow is a slot controlled airport which pushes prices up and has caused some airlines to operate empty flights to hold their slots.

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Institutions, Institutions, Institutions

But we believe our first duty is to this country, and the president continues to act in a manner that is detrimental to the health of our republic.

- New York Times Anonymous Oped this Week

One of Daron Acemoglu and James Robinson’s overarching theses in Why Nations Fail is that the success of a country is predicated on the inclusiveness of political and economic institutions (which in turn underline an equal rule and application of law). I think many Trump supporters will be upset about the stance taken by the senior administration official, but it’s important to remember that all of these officials (including the President) took an oath specifically to the Constitution and in turn to the precedent set over the last 200+ years. It generally seems best that government is slow to change. Consistency allows people and businesses to feel confident in the future and make investment in themselves and their communities accordingly.

Related reading:

At one point I heard some pretty convincing arguments that Trump was pursuing a madman strategy like Richard Nixon did during the Vietnam War but I think my confidence in that theory falls more each news cycle.

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Snap - When your Core Competency is a Loss Leader

We won’t put advertisements in your personal communication — things like Snaps or Chats. That would be totally rude. We want to see if we can deliver an experience that’s fun and informative, the way ads used to be, before they got creepy and targeted.

- Evan Spiegel

I’m increasingly receptive to the narrative that Snap is becoming the new Twitter. While the revenue of both are restrained by the limited degree to which they have information in the user (and such can’t charge advertisers a premium for really direct targeting like Google and Facebook), Snap also suffers from the lack of a feed users can be sucked into.

Snap’s core competency is messaging by way of photos. This has been a notorious segment for monetization. Specifically, Facebook Messenger puts ads in between messages and it’s a horrible user experience, WhatsApp just charges $1/year after the first year, and even WeChat/KakaoTalk just use messaging as a loss leader (beyond simple things like sticker packs) to pull people into their wider ecosystem based around their specific messaging app. If we’re being honest, Facebook is using messaging as a loss leader too.

The problem with Snap is that messaging can’t be a loss leader.

This means that Snap can only advertise in areas outside of its core competency and has to both create new channels for its customers to interact with, and monetize it at the same time. This leads to a really bad user experience which leads to lower advertising premiums. When the data you collect on users is also sparse, (Snapchat must have orders of magnitude less data on each user than Facebook) ad premiums suffer even more and their relevance drops. I’ve come to really appreciate Facebook Ads and interact with a good number of them, while all I want to do when I hit a Snapchat ad is to continue clicking. If Snap dies, it will be because of this spiral (poorly monetized core competency + a lack of user data leads to a bad user experience and low rates of interaction which leads to lower quality advertisers which only reinforce users idea of a Snapchat ad).

Related reading:

Snap seems to have really good international reach — 13+/32 million in the Kingdom of Saudi Arabia seems remarkable.

I think Snap suffers from one of the same core problems as Twitter - particularly its defunct Vine division. Users have some tolerance level for the percent of their time they will spend on a platform engaging/tolerating ads during any given session and Snapchat Stories/Vine sessions are just too short to ads to exist at any meaningful scale without being disruptive to a user’s experience (feeding the aforementioned cycle). Feed based social networks like Facebook (and increasingly Twitter) have longer sessions and a more natural place to put ads).

Having more user data would probably help Snap deliver “an experience that’s fun and informative”. I find Facebook ads so good because they’re so targeted for my niche interests. All I see on Snap are body building videos, pyramid schemes, and fraternity formal planning sites (I guess they know I’m on a college campus…).

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Melting Pots - Not Quite Everywhere

In China, there are only fifty-six legally defined minzu [hard to translate but basically nationality/race] one indicated on every citizen’s identity card…

- Peter C. Perdue - Demystifying China, New Understandings of Chinese History

This term I’m taking a class on Chinese History since the Qing Dynasty. Our first reading was from Naomi Standen’s book “Demystifying China and I think the first chapter is one of the best introductions I’ve seen to Chinese History and the mindset of its current leaders.

I think a lot of people have the tendency to project their model of the world on other societies and people (creating a poor base of understanding from which mistakes are made). This bit seems particularly important to helping specifically Americans in this quest because of how comparatively loose we usually are with this type of thing.

Related reading:

I had a similar experience to this in a course I took on Imperial Russia my senior year in high school with a chapter from Richard Pipes’ Russia Under the Old Regime (specificlaly the chapter titled “Consequences of the Enviornment”).

Pipes’ thesis is that as relatively poor fighters, the Russian people (worth noting the Russian language makes a distinction between ethnic Russians - русский - and citizens - россияне) were pushed into the Eurasian Steep where there was little rain and bad dirt. This in turn led to a more decentralized society that limited the development of cities and markets. As such, the rare surplus was turned to alcohol, and capital accumulation did not occur as it did in the rest of the world. According to the author, these factors set the stage for a Russia whose Eastern Orthodox beliefs find piety in suffering/struggle, and a unique identity distinct from the rest of the world. It was a really wonderful introduction to Russian History/thinking and definitely helps you avoid projecting your own cultural background/experiences on a country that is distinct from its neighbors in Europe and Asia.

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The Saudi Spat with Canada - Messy

Saudi Arabia expelled Canada’s ambassador, froze trade with the country and will reportedly dump its Canadian investments. The kingdom’s ire was raised by a series of tweets from Canada’s foreign minister, in which she called for the release of Saudi human-rights activists. The Saudi government insisted that only a full Canadian climbdown would “fix its big mistake”.

- The Economist, Espresso 8.11.18

Kind of continuing from last week’s theme about authoritarianism, the Saudis are demonstrating how liberalization requires harsh stances to be taken to prevent a slippery slope away from government control. [1]

Saudi foreign policy recently has struck me as quite odd. There’s a really intriguing NewYorker Article that runs through it — don’t let title throw you - there’s definitely a lot of stuff on Trump and Kushner but the meat is on Saudi Arabian Crown Prince Mohammad bin Salman (MBS) and his ally the Crown Prince of Abu Dhabi, Mohammed bin Zayed Al Nahyan (MBZ). War in Yemen [2] and a united Sunni movement against Shiite Iran has reshaped the politics of the Middle East (article focused specifically on how this has affected the PLO’s efforts) and have surely served to only strengthen domestic support for the young princes.

Continuing on the theme of external crisis, there seems to be a strong correlation between external crisis and approval rates of leaders. Vladimir Putin has harnessed this phenomenon over the last 20+ years to keep domestic support high (the dubious Russian Apartment bombings helped lead to the Second Chechen War and conflicts like the Russo-Georgian War and the seizure of Crimea have served to galvanize the Russia public against the West and encouraged Putin’s rule of the Russian Federation. Even George Bush saw his approval rating spike 40% in the wake of September 11th attacks and ~10% both after the invasion of Iraq and the capture of Saddam Hussein.

I don’t totally understand why this correlation exists but I don’t have strong memories of transformative events like this. It’s probably a sense of nationalism and fear that leaders play well to when they show strength in a crisis but would love to hear your thoughts [3] :)

When I cross posted this on my Medium on 07/06/19 I added some reflection:

[1] MBS had me and many others optimistic that he would be a liberalizing force in Saudia Arabia. After the slaying of journalist Jamal Khashoggi in late 2018, we aren’t so sure :/

[2] A war that seems to only become more brutal and wrought with crimes against humanity as the conflict lumbers towards its fifth year.

[3] also to feel that someone is in control when there’s chaos

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