Arsenal of Democracy (?)

If you didn’t know any better, you might think that the U.S. weapon export goes through the Pentagon / Department of Defense, but it is actually done through the State Department, because weapon sales are political by nature.

FDR said that the U.S. must be the arsenal of democracy in 1940. The U.S. became an arsenal alright, but for strategic reasons. Weapons are one of the few things that can be both carrots and sticks.

Arsenal of democracy

Shifting priorities and interests over the years can be observed in the chart above:

  • Support for post-war Europe and focus on propping up south and central American governments resulted in higher share of weapon sales to Europe (58%) and Americas (23%). But that was the only time.
  • After the Iranian revolution, the U.S. arms sales shifted towards Asia Pacific, providing weapons to allies in Japan, South Korea, and Taiwan.
  • Now the focus is back on the Middle East, as a resurgent Iran competes for influence in the Middle East against an ambitious young Saudi King (Mohammad Bin Salman, 32), who happens to be a great customer to the U.S. (Saudi Arabia accounted for 18% of sales in 2015-2016)

Fun fact I came across while researching this topic. I saw that U.S. exported to North Korea back in the 80’s and reached out to SIPRI to understand what the hell happened there (I thought the data was incorrect). It turns out that the U.S. exported $62M USD worth of Helicopters to North Korea in 1983/84, and those are still being used today:

In 1983-1984 a US company (Associated Industries) sold 87 brand-new Hughes-500C and Hughes-500D light helicopters to North Korea, circumventing US export rules by supplying via a West German dealer and deliveries via various countries. Since then the helicopters have been in service in North Korea – they were for example seen in several parades and in air shows in 2016 and 2017 (see here).┬áThe illegal export led to a court case against the US company in 1987.

Journalism for the readers

Digitization of content has moved advertisement away from the content creators to the platform, and has moved consumers closer to the content than ever before. The newspaper industry, long supported by ad dollars and print newspapers distribution, has naturally suffered from this. Here’s a look at how New York Times managed to survive despite negative market forces:

06 nyt2

As content becomes digital, advertisements become digital. Within the digital advertising landscape, almost all of the growth in this market is going to Google and Facebook, which already account for 60-70% of the overall market. That means advertising dollars are no longer going to NYT.

06 nyt3

A strong and well-executed pivot to the digital world allowed NYT to maintain its bottom line – this is demonstrated by the rapid growth in digital subscription revenue.

This is an indication that the future is reader-oriented, and newspapers will have to cater to readers much more than before. While newspapers can now be less concerned about offending large corporate interests that may pull advertising, there’s a risk of reporting only on the content/perspective people want to read about (e.g., reinforcing existing beliefs or distributing fake sensational news) than what’s truly important.

We need to deal with being replaced

Entrepreneurs build companies and create jobs for others. At least that’s how it’s supposed to work. This has become less effective over-time with rapid technological improvements that make starting a new business much less labor-intensive than before.


jobs created per startup


As there is no reason to expect this trend to reverse, it may be useful to think about shifting the policy focus from promoting business creation to protecting / re-training low-skilled workers to prevent further worsening of inequality.

See the difference

Is China catching up to the U.S. as world’s top superpower? Yes, and most of the world think so. Is it going to be soon?

The U.S. leads the world in both economic influence and military might – by far. While China is rapidly catching up, there’s still a difference between how China is perceived against the U.S. against the U.S. and where China actually stands.

What it looks like now:


But the perception is different:

perception(note – excluded from this graph are responses with “I don’t know” or “no opinion”)

So much for the European allies huh? (tongue-in-cheek)


Economies at the metropolitan level

2016 Avg. GDP per Capita by MSA (1.15.2018)

  • If the greater New York area were its own country, it would be the 11th largest economy in the world at $1.4 trillion (2009 dollars) – this is roughly the size of South Korea’s economy, and larger than Russia, Spain, or Australia’s. It accounts for 6% of U.S. population and a tenth of U.S. GDP.
  • Bet you didn’t know that the small city (170,000 people) of Midland, Texas has the highest GDP per capita of all ‘metropolitan’ areas in the U.S. at $175K. Why? Booming oil & gas industry.