Recommended Weekend Reads

The Ongoing Crisis in Venezuela, Demographic Challenges Globally, and How is the Inflation Reduction Act Working Out?

August 23 - 25, 2024

Please find below our recommended reads from reports and articles we read in the last week.  We hope you find these useful and that you have a relaxing weekend.   And let us know if you or someone you know wants to be added to our distribution list.

The Crisis in Venezuela

• A Question of Staying Power  Center for Strategic and International Studies

  In response to protests against its brazen election theft, the Maduro regime in Venezuela has unleashed a wave of violent repression. While the exact numbers vary, credible human rights organizations have logged nearly 2,000 arrests, some even of minors and young children, and more than two dozen people killed. Venezuelan president Nicolas Maduro bragged that more than 2,200 arrests had been made and that prisons repurposed to house new political prisoners would feature “reeducation” and “hard labor” camps.  Meanwhile, reports from low-income barrios around Caracas convey that regime intelligence services have marked homes of protestors with a black “X.” Rather than hiding repression, the regime has launched a public campaign called Operación Tun Tun (Operation Knock Knock) meant to instill maximum fear by arbitrarily knocking on doors. The regime has filmed security forces breaking into protestors’ homes and arresting them and openly publicized videos of arbitrary arrests—one of them set to the popular Christmas song “Carol of The Bells.”

• Venezuela: Possible Paths Forward  Americas Quarterly Podcast

  Since the election on July 28, Nicolás Maduro has unleashed a wave of repression not seen in Venezuela before. The question on everyone’s mind is, what now? Will Venezuela move further down the path of a dictatorship, or is there some chance of a negotiated solution that might lead to a democratic transition? In this episode, Roberto Patiño, a civil society leader and a member of one of the opposition parties, discusses the opposition’s strategies, evaluates the positions taken by Brazil, Colombia, the U.S., and Mexico, and describes what he sees as cracks in the Maduro regime.

  U.S. Elections 2024

• Beliefs About Political News in the Run-up to an Election  Charles Angelucci, Michel Gutman, and Andreas Prat/National Bureau of Economic Research

  The closer we get to the election, the more we hear about “fake news” and a lack of neutrality in the media.  From where we sit, there is definitely something to it – the question we have is how much of is intentionally slanted due to reporters’ personal political viewpoints filtering into the story or just poor reporting. But what about the reader’s role?  In this new study, three economists developed a model to look at the influence of elections on the formation of “partisan-driven information universes.”  The study shows a partisan impact on the news during election periods.  Outside of the election season, an individual is 4 percent more likely to choose a true story if it favors their party; in the days prior to the election?  This increases to 11 percent.

Global Demographic Trends

• Europe’s Demographic Winter and the New EU fiscal Rules VOX EU/Center for Economic Policy Research

  The EU recently settled on a revision of its fiscal rules replacing a system increasingly seen as “one size fits all” when it came to debt sustainability analysis for EU members.  While this might make a lot of sense, this paper argues that many EU member states are facing a sustained demographic decline now and in the years to come, a careful assessment of the uncertainty surrounding population projections is needed.

• Korea faces income losses within half a century without more labor migration  Peterson Institute for International Economics

  South Korea is facing a social and economic crisis caused by its rapidly aging population.   Today, South Korea is the second oldest nation in the world with 40 percent of its population being 65 years old or older.  For years, South Korea had highly restrictive immigration policies.  But in the early 2000’s the country began opening the door to immigration to offset the loss of workers.  But it is not enough as the below chart indicates, as Korean income losses per citizen due to aging is expected to decline by 10 percent within 18 years. The only way to avoid this projection (that only get worse in outlying years) to ramp immigration – a true social and cultural challenge to this ancient society.   And it should be noted: Italy, Germany, Spain, and China are not far behind South Korea in facing this demographic catastrophe.

 Geoeconomics and Industrial Policy 

• “Shadow Reserves”: China’s Key to Parry U.S. Financial Sanctions   War on the Rocks

  As the U.S. and China continue to spar over financial and trade issues, Beijing has found a way to insulate their strategic trade away from dollar-based sanctions.  China’s central bank has steadily shed its official U.S. dollar reserve holdings – which means, if China were to decide to invade or blockade Taiwan, the U.S.’ ability to impose financial sanctions on China will be diminished.  But it is not complete – far from it: only a third of China’s goods trade are settled in renminbi.

• Attracting CHIPS Investment: Industry Recommendations for Policymakers  Semiconductor Industry Association

  Chips are integral to the 21st century economy, from electric vehicles, AI data centers, and medical technologies to mobile devices, energy grids, and streaming platforms. Historically, semiconductor supply chain production activities have concentrated in a handful of regions. But as global chips demand increases, and the industry responds to geopolitical uncertainty and other disruptions, companies are diversifying their global investment footprint to improve supply chain resilience.  In our new SIA-BCG report, Attracting Chips Investment: Industry Recommendations for Policymakers, we recommend policy actions governments can undertake to better attract investment based on the following five key factors that semiconductor companies evaluate when making investment decisions.

• Clean Investment Monitor: Tallying the Two-year Impact of the inflation Reduction Act  Rhodium Group/MIT Center for Energy and Environmental Policy Research

  As the United States approaches the two-year anniversary of the Inflation Reduction Act (IRA), this report provides a comprehensive analysis of actual investments in clean technologies and infrastructure since its enactment.  From the second half of 2022 through the first half of this year, actual business and consumer investment totaled $493 billion, a 71% increase from the two-year period preceding the legislation. This report includes a detailed state-level breakdown of clean investment in the post-IRA period.