The Innovation-War Cycle

Welcome to This Week’s Leyendecker View

Not all those who wander are lost.
– J. R. R. Tolkien

THINKING OUT LOUD

The Innovation-War Cycle

Consider this hypothetical…maybe it’s theoretical…

When a big step-change innovation cycle starts, it tends to catalyze a period of globalization. The reason is obvious: no matter where the innovation starts, its owners will want to harvest potential across the globe.

Generally, new innovations begin in developed economies, where mature resources and infrastructure can accommodate new ideas. Eventually, innovations spread to emerging economies open to embracing the new technologies.

During periods of globalization, many nations tend to work collaboratively and cooperatively. The countries where innovation originates naturally want to benefit economically. Other nations want the benefit of these new innovations to inspire their own domestic economies.

From the 1800s to early 1900s, step-change innovations like the steam engine, distributed electricity, telephone, automobile and airplane began in Europe and the United States. Eventually, these innovations worked their way into Japan and parts of South America. During this period, Japan became emboldened and Argentina’s economy grew to one of the strongest in the world.

New innovation tends to benefit emerging economies more since they are starting from a lower economic foundation. A good example is China’s recent ascendancy, thanks to their very low labor costs and regulatory environment.

Innovation can help emerging economies become significantly more competitive. But when emerging economies become much more competitive, the more developed and dominant economies start to worry. They now have tougher competition.

Protectionism is the next natural step. The governments of the legacy developed and dominant economies naturally want to protect their industries and labor forces. Today, we are seeing both the US and Europe enacting tariffs to protect their communications, vehicle manufacturing and climate change-focused industries.

Following the 1800s – 1900s globalization period, the United States’ Smoot-Hawley Tariff Act of 1930 levied a series of protectionist tariffs. And it started a trade war. Global trade shrank significantly.

When global trade contracts, global collaboration and cooperation naturally subside. Countries turn inward. At the same time, emerging countries that just experienced new growth can feel much more confident and, in turn, stoke their regional and/or global economic and political aspirations.

As the step-change innovations of the mid 1800s to early 1900s spread across nations, newly emerging economies—particularly German and Japan—were emboldened. The result was World War I and World War II.

Today, Russia and Iran have started wars, and China’s Taiwan ambitions are looking ominous.

Innovation gives way to globalization, which eventually triggers protectionism, emboldens national self-interest and creates tension on the global stage. Protectionists are distracted. Ascendant nations flex their muscles. A slippery slope develops. Tensions lead to conflicts, which boil over into war.

War is then fought with derivatives of the innovations that created the preceding globalization period. In World Wars I and II, those innovations were tanks, aircraft, aircraft carriers and eventually the atomic bomb. Today it’s satellites, the Internet, computers, smartphones, drones and cyber campaigns.

Maybe it’s worth pondering if every era of step-change innovation naturally leads to the next era of war.

THE ECONOMIC VIEW

May jobs exceed expectations, unemployment ticks…up?
Does anything make sense anymore?

Consumer spending is losing steam
Will layoffs be the next shoe to drop?
Job openings are dropping

American savings are not near enough
Inflation certainly won’t help.

The Fed is in a tight spot
Slower economy but sticky inflation.

INFLATION, DEFLATION, OR BOTH?

The funflation economy is dying
Major music artists cancel concert tours.

Canada cuts interest rates
The ECB follows
A new global trend in the making?

China already has an over-capacity problem.
Now it’s about to get worse
China risks a trade war

THE LABOR VIEW

Q1 labor costs weaker than reported
2023 job creation weaker than reported

With today’s starting salaries
Flight attendants qualify for food stamps

US job growth set to slow
Say economic monitor, Conference Board.
While tech employment grows

MEANWHILE IN EUROPE

“Greenlash” grows
Climate change policies hurt voters.

Europe steel makers struggle to decarbonize
Even after billions in subsidies.

S&P downgrades French debt
Where’s the Macron magic?

THE GLOBAL GAME

Sheinbaum wins by a landslide
Mexican stock market and peso fall.

Modi wins India election
But failed to win an outright majority.
He lost support from India’s poor

The ANC gets kicked to the curb
South Africans want new leadership.

THE UKRAINE FIRE

Is Russia sabotaging Europe?
The West struggles with what to do
Were they behind London hospital cyber attack?

Ukraine strikes into Russia
With Western-made weapons

The Russian Western asset quandary.
Should they be collateral for a Ukraine loan?

THE GAZA FIRE

Has the real war not even started?
Hezbollah is far more capable than Hamas.

Biden calls for a cease-fire
Israel isn’t interested
Well, maybe they’ll listen
Netanyahu wants the “destruction of Hamas”
Hamas wants to survive for the next attack
They continue using their own civilians as shields

THE SLIPPERY SLOPE

NATO creates troop corridors
In case US troops are needed in Europe.

Turkey wants in the BRICs alliance
But aren’t they headed to the EU?

China readies its cyberattack abilities
It has the NSA worried.

FINANCE

Here comes the Texas Stock Exchange
With backing from BlackRock and Citadel.

PE investors want their money back
Get with it on liquidity events!
“Everything is not going to be OK” in PE
Says Apollo co-president.
Future PE returns not looking good

American investment income at a record
Is this an everlasting trend?

KKR announces a global approach
To expand employee ownership.

REAL ESTATE

Apartment developers scuttle projects
Are apartments over built?

Pension funds are at risk.
They have lots invested in real estate
Some investors are getting wiped out

One word describes housing: unaffordable
According to top housing economist.
Home buyers revolt against high prices
Are home prices about to fall?

TECHNOLOGY

The tech world needs lots more energy.
Yet they lead the anti-carbon narrative

NY to restrict social media
No more algorithms to addict teens.

Sit down with Neuralink’s first recipient
Hear his personal story.

THE CHAT ON AI

AI to prompt the prompt engineers
Says Microsoft’s chief scientist.

The AI PC is coming
Get ready for “IntelliPhones”
Hardware companies can’t wait!

Nvidia is more valuable than Apple
Good luck with that.

OUR GOOD FRIEND, FAILURE

Physicists knew when the universe would end.
Until they didn’t

American cities are a mess.
Are nonprofits to blame?

Virginia copied California EV law.
Now it wants out

THE NEXT NORMAL

Detroit is back, baby!
Population growth after 70 years

Nestle goes after a growth market
Old folks food.

The hot Gen Z job is teaching
Because they want summers off.

THE WAR ON CARBON

Carbon removal costs rise
It’s not as cheap as originally planned.

Net zero’s cost? Only $215 TRILLION
Fire up the money printing presses!
The world is behind its clean energy goals

OPEC+ agrees to extend production cuts
US production has flooded the market
Is the $100-a-barrel dream dead?

THE ENERGY TRANSITION

Natgas-fueled power generation
May about to get super clean

Hydropower is proving less reliable
Not great renewable news.
Solar surges but wind is in trouble
Can our aging grid keep up?

The energy transition won’t happen
There’s simply too much demand.

THE EV DREAM

Ford and VW EVs use Chinese batteries.
GOP lawmaker wants them banned

Chinese EV makers defy sales slump
By cutting prices!

China dead set on conquering the EV world.
Outside of the US and Europe

THE CHINA SYNDROME

The US seeks to build an Asia-Pacific NATO
So suggests China.
China pushes Philippines around
“Very worrisome,” says President Marcos.
The Philippines and US get cozier
US to deploy “assets” to Manila

China’s property stocks back in the ditch
Real estate problems linger.
It’s a giant, giant mess

Beijing announces chips investment program
Trying to keep up with the West.

THE WASHING-TONE

FTC focuses on AI
Nvidia, Microsoft and OpenAI in the crosshairs.

The US gave chipmakers billions.
Will it prove an effective stimulus?

Is Washington in chaos?
Now the attorney general is in the hot seat

THE ELECTION DISTRACTION

Biden wants to make sure you know
That Trump’s a convicted felon
Get used to hearing those words ad nauseam…

Biden channels Trump. Kinda.
No more illegal immigration asylum
Well…only 2,500 a day can claim it

Some people are voting for Trump.
To save democracy

MAKING A BETTER YOU

How to decompress after work
Take’r easy there, pardner.

A 20-minute intense workout.
That’s easy on your joints

How to beat worry
Imagine all the time you’d save.

HOW ABOUT A BREAK

How the tongue works
The textbooks were wrong.

A beginner’s guide to sociopolitical collapse
Civilizations always commit suicide.

The Prometheus complex
Can we control our instinct to create?

PLANNING VACATION?

Get in line for this great vacation
Building trails in the Faroe Islands.

One-minute vacations
The browse button is bottom left.

Magnificent US train rides
All aboard!

MUSIC BOX

Global radio station of the week…
Koh Samui
Get your Thai party hat on.

How about a golden oldie…

“Living in the USA”
Steve Miller Band in 1968.
1968!!! That was 56 years ago!
Lyrics can be poetry, ya know.

CASTING AROUND THE PODS

Bari Weiss interviews Jerry Seinfeld
Is comedy a source of wisdom?

VIDEOS OF THE WEEK

Young Woman and the Sea trailer.
The first woman to swim the English Channel.

The Dead Don’t Hurt trailer.
Viggo Mortenson does it all.

Gasoline Rainbow trailer.
A new Dazed and Confused?

FROM THE HEADHUNTER’S KITCHEN

91 kitchen tips
Only 91 great ones!

Forget that breakfast fasting…

Banana oat pancakes
Sunday morning, ahhh…

Ten twists on French toast
Don’t look at these photos.

A simple Japanese breakfast
Wait, wait, wait, this is breakfast?

THE RANDOMS

So Trump could go to prison, and Biden could be headed to a dementia care unit. Who will actually be on the ballot in November?

Is Donald Trump a scoundrel or a patriot? Or is he both?

If abortion is legal, then shouldn’t assisted suicide should be legal, too, right? “Don’t tell me what I can or cannot do with my body!”

All manner of activists want to sue big oil for climate change. Could big oil sue these people back for splurging on hydrocarbons for their personal and/or economic benefit?

Hydrocarbons make up over 80% of today’s world energy. How about we get rid of them immediately?

Who remembers when TV was free? Sure, we had to watch some commercials to get free TV. But now we have to pay for TV, and it looks like commercials are coming back. Inflation rules in TV entertainment, too.

Most of us will readily pay $100 a month for streaming entertainment. But, for some reason, people have an aversion to paying for worthwhile perspectives on our world. Is this because “information is free” and everyone thinks they’re smart enough to cull through TMI?

Because the cost of living has risen so dramatically over the last few decades, it now takes two incomes to achieve “comfortable” living. But now childcare cost inflation has blown past official inflation. What now? It would seem wages must rise materially or deflation must grow. Or maybe a little of both?

Has anti-white hatred created mental health problems?

The new weight loss drugs seem to be miracle drugs. Do you think there are any long-term adverse effects from these drugs? Or of their widespread use? Nah…pharma companies always have our best interests in mind.

How much do you know about donkeys?

Who do you know who would be considered a patriot?

IN CASE YOU MISSED IT

Under the Radar
May 31, 2024

Born Lucky
May 24, 2024