Investor’s CIA: Stock Investing in an Era of Coronavirus

In spite of the scary scenario painted in the preceding pages, the coronavirus pandemic can present a good investment opportunity for stock investors. If history is any guide, investors who panic and sell off their investments, or who abandon their long term investment strategy as a result of a pick-up in volatility often regrets that decision.

Since January of this year, the stock market has been very volatile because of fears over the potential impact of the coronavirus pandemic on both the global economy and society as a whole. Even though no one can predict how long this coronavirus crisis will last, available evidence both from the media and from the health agencies showed that local governments and federal governments are taking important steps to prevent the spread of the virus as well as promote confidence in both the stock markets and economy as a whole.¹ Eventually, more people will eventually become aware of these governments’ actions in that direction and this will help to counter more expected negative virus headlines.

Overall, all the financial markets across the globe have suffered their worst period since the 2008 crash, as more investors and their clients become concerned that the economic impact of the coronavirus crisis will be very disastrous. Their concern is indeed logical, especially given that more than $5 trillion has been wiped off share markets globally as of the second week of March 2020. In addition to that, the virus has continued to spread to every continent and the number of new cases diagnosed outside China (where the diseases started) has continued to increase. There is no doubt that a pandemic like this could knock more than $$1.1 trillion off the expected growth of global gross domestic product(GDP) if lasts for up to six months.² The reason for this is simple: out of fear of uncertain future consumers will spend less, people will be unable to work, and travel and tourism will drop sharply,  and investments (both local and foreign investments) will fall. It is important to note here that something similar to this has occurred during the past outbreaks, including SARS and the swine flu.

It is worth noting that it is, at present, possible to estimate the potential economic damage globally, due to a lack of data. Not only does data showing industrial activity emerge slowly, but there is also another issue that might hamper such estimates: past comparison at this time are made harder by the changing timings of China’s  New Year. It is worth remembering that the initial outbreak in Wuhan coincided with this annual holiday.³ There is, however, some evidence of the crisis’s potential economic impact from some sectors, such as travel and tourism. Take Thailand – a country that normally gets more than a quarter of its visitors from China. As of the end of the second week of February 2020, Thailand saw its tourist numbers drop 70 percent when compared to that period the previous year.⁴

The crisis is already hammering the tourism sector, and we are eventually going to see weaker trade which, in turn, will lead to supply chain problems. While some businesses will be just fine, many others will be badly affected. The airline industry, for instance, expects a 4.7 percent drop in demand this year. If that happens, it would lead to an overall decline in global air travel since the 2008 crash. By the end of 2020, as much as $29 billion could be wiped off the airlines’ global revenue, with those airlines in Asia-Pacific expected to be hit hardest.⁵

Car manufacturers around the world are also feeling the heat from the crisis. According to the available published evidence, companies like Jaguar Land Rover is currently not selling any cars in China. In fact, global car sales might decline in 2020 - the first time in many years. To put this in perspective, car manufacturers make use of a model known as the just-in-time production model. Under this production model, parts arrive at a car factory shortly before they are needed rather than being stored on site. While some car manufacturers in Europe less than 10 percent of their components from Asia, they could still face disruptions. It is hence not surprising why a company like Jaguar Land Rover started flying parts from China to the U.K. in suitcases as of March of 2020. There is no doubt that production will eventually restart in Chinese factories that have currently downed tools. Even if that happens, there will still be a delay in restoring supply chains, for the simple reason that parts take about six to seven weeks to be shipped from Asia to Europe.

The overall effect on individual countries remains to be seen. There is no denying how bad the effect will depend on where the economic damage lands. Simply put, companies with stronger social welfare, such as the United States, Canada, and Western Europe can handle the effect better than the developing nations such as the countries of the Middle East, Asia and eastern European countries.

In spite of the scary scenario painted in the preceding pages, the coronavirus pandemic can present a good investment opportunity for stock investors. If history is any guide, investors who panic and sell off their investments, or who abandon their long term investment strategy as a result of a pick-up in volatility often regret that decision. Let me put it as simply as I can: over the long term, the time in the market is much more important than timing the market. Consider figure 1, which  showed how the S&P 500 Index performed for the time-frame of 1995 2018. Note that the S &P 500 Index is an index that tracks 500 widely-held stocks in the stock market and is often used as a proxy for the stock market.⁶

The danger that most people likely fear the most in this era of coronavirus pandemic is the chance that their investment loses money because of the volatility in the market. Yes, it is true that the prices of financial assets typically move up and down frequently, especially in a pandemic of this type – sometimes almost violently, as we have witnessed in the past few months in the market. Not only that, but these ups and down movements are also extremely difficult to predict, especially when the investor is doing the prediction on a day-to-day basis. However, figure 1 has provided the first line of defense against losing money to every investor, because it showed that all they need to do is to give their investment some more time to recover their value. Simply put, figure 1 showed that even though stock prices(represented by the S &P 500 Index) and other financial assets constantly bounce up and down, the short-term bumps smooth out over longer periods of time and reveal a longer-term trend. In other words, so long as the investors' money was put into assets that are really creating value, the trend of prices will eventually bounce back and show that value.⁷

As was noted earlier, the S& P 500 is a pretty good indicator of the overall value of the U.S. stock market because it measures the stock prices of 500 of the largest companies in America. So it is not surprising that most people, especially the investors in America, western Europe, and Latin America, use it to stand for the price of the entire stock market. Figure 1, which showed that stocks generally recover over time after a bear market, revealed one important fact: as an investor in this era of coronavirus pandemic, if the current market downturn makes you panic and sell off your investments, you would lock in huge losses and miss out on the recovery that would eventually occur. As a simple way to say this is that time can be an effective defense against the losses on your investments in this era of coronavirus. But to benefit from this time factor, you must be patient, and you must also have the time to spare.

In plain terms, the coronavirus crisis has disrupted economic activity as well as dislocated the capital markets. So it is only natural for investors to begin to debate whether the crisis could derail the global cycle. The fact remains that the recent sharp drops in global asset markets mean that the coronavirus pandemic could indeed deliver a sizeable impact to global growth, mainly in the first half of the year. Hence it is very important for any serious investor to know or have some clear perspective on the outlook for the full year.

In general, it is very possible that new cases and disruptions may continue in the near term. However, it is also very obvious that global policymakers and politicians will use easing measures and rate cuts to help cushion the effects of the impact. It makes sense then to assume that new cases of the virus may peak by the end of April or May of 2020. If that does happen, then global growth could pick up in the third quarter of 2020. This is because by then the disruptions caused by the pandemic will fade, especially given that the global economy will be supported by accommodative monetary and fiscal policies.⁸

           

References

¹Taylor, A. (2020, March 6). Trump Signs $8.3B Bill to Combat Coronavirus Outbreak in US. Associated Press. Retrieved March 14, 2020, from https://apnews.com/30fc0af2ffb9320e1d8fa6bb6d8b23a1

²Vaughan, A. (2020, February 28). Coronavirus Pandemic Threatens to Knock $1 Trillion Off Global Economy. New Scientist. Retrieved March 14, 2020, from https://www.newscientist.com/article/2235697-coronavirus-pandemic-threatens-to-knock-1-trillion-off-global-economy/

³Hamzelou, J. (2020, January 27). New Coronavirus May Be Much More Contagious than Initially Thought. New Scientist. Retrieved March 14, 2020, from https://www.newscientist.com/article/2231453-new-coronavirus-may-be-much-more-contagious-than-initially-thought/

⁴Vaughan, A., op. cit., para. 7

⁵ibid

⁶Evans, R. E., & Malkiel, B. G. (1999). The Index Fund Solution: A Step-by-Step Investor's Guide. New York: Simon & Schuster.

⁷Fullenkamp, C. (2012). Understanding Investments. Chantilly, VA: The Great Courses.

⁸Ahya, C. (2020, March 15). Growth Interrupted: 3 Coronavirus Scenarios for Investors. Retrieved from Morgan Stanley: https://www.morganstanley.com/ideas/coronavirus-impact-on-global-growth

⁹ibid

¹⁰ibid

Let’s talk about Trump and China

Trump is right this time

Even though many U.S. business leaders fear that tariffs on a wide range of Chinese imports will hurt their bottom line and raise prices for the consumers, I am inclined to support President Trump’s unconventional approach this time, for one simple reason: for the past two decades, nothing else has worked in terms of making China stay in line.

The decision by President Trump to impose tariffs on an additional $100 billion in Chinese goods has given rise to a great deal of discussion, much of it centered on whether such move could lead to a trade war between the world’s two largest economies. The consensus was that, if a trade war do occur between these two countries, it would derail the current global economic expansion as well as cripple American companies doing business with China. Not only that, a trade war could further complicate geopolitical priorities especially now that China is helping the Trump administration in scheduling historic talks with North Korea in June.¹

But perhaps it is time for us to be honest with ourselves and ask whether President Trump’s claim that China is a trade cheat is true. To put it bluntly, many of the Trump administration’s economic documents have been laughably sketchy and, sometimes, laughable. However, there is one exceptional document presented by the administration, namely, the Office of the U.S. Trade Representative’s 2017 report to Congress on China’s compliance with global trading rules.² This report detailed how China has failed to enact promised economic reforms as well as how it had backtracked on others. In measured prose and great detail, it explained the series of strong-arm tactics used by China to block foreign firms from competing in its huge market. According to the report, the Chinese government has increased its intervention in the economy in recent years, by particularly taking aim at foreign companies. It is worth bearing in mind that all these contradicts China’s commitments in 2001, when it joined the World Trade Organization (WTO).³

So, it is only natural for President Trump to decide that it is time to take action. Whether or not one accepts the conclusion that the United States was blinded by their expectation that China would liberalize its market when it supported that country’s entry into WTO, it is clear that that expectation has proved to be mistaken. The fact remains that the WTO rules under which the member nations (including China) are required them to abide by certain codes for doing business but, unfortunately, China has been violating these codes.

 When China applied to join the WTO, the United States handled their application the same way they handled that of the other countries that joined in the mid-20^th century. When these countries, including China, were admitted, the United States in particular and the free world in general opened their markets to the new entrants. The newly admitted countries, in turn, reciprocated by lowering barriers to their markets. That was how such countries as Singapore, South Korea and Japan joined the WTO. It should be noted here that these countries (excluding China) have two things in common. First, they were relatively small when compared to the size of the global economy. Second, they all lived under the security umbrella of the United States. As a result of these two factors, it was easy for the United States and the West to have considerable leverage over these countries when they joined WTO. During the time that it joined the GATT (which was the precursor to the WTO), Singapore had only 2.2 million people and a gross domestic product (GDP) of $19 billion. South Korea had a population of 30 million and a GDP of $41 billion when it joined the organization. With a population of 90 million and a GDP of under $800 billion, Japanese economy was larger than that of Singapore and South Korea when it joined the organization.⁴

Now, let’s take another look at China when it joined WTO in 2001. During that time, China had a population of 1.3 billion people and a GDP of $2.4 trillion.⁵ Judged from that size, China’s economy was almost a fifth of U.S.  economy when it joined WTO. To the Chinese politicians at the time, the large size of their economy and market provided an immense advantage in that it means that every country in the ‘WTO club’ would vie for access. This large demand for their market (that is, China’s market) would, in turn, give the country the ability to cheat without much fear of reprisal. Also, unlike Singapore, South Korea and Japan, China was never dependent on United States for its security. As a matter of fact, it had fought a war against U.S. troops in the 1950s with some success: about thirty-six thousand American troops died in that war.⁶ Today, it has grown into a great power in its own right.

The scale and speed of China’s integration into the world trading system made it the most dramatic economic developments of recent decades. Studies have found that about a quarter of all manufacturing jobs lost in the United States between 2001 and 2015 could be explained by the trade deficit with China, coupled with the unfair Chinese trading practices, which have hollowed out the U.S.  manufacturing sector.⁷  It is only fair to say that nothing on this scale had happened before. It is also not an exaggeration to say that feelings were mixed when China began to integrate rapidly with the world economy, even though the rest of the world had waited a long time for that country to open up.

There are obvious reasons for that: over the years a lot of foreign companies had suffered a great deal while doing business in China. Let me put it as politely as I can: as a condition for gaining access to China’s huge market, its government requires foreign firms to hand over their trade secrets – a requirement that leads to Chinese companies getting their hands on the foreign firms’ technologies and intellectual properties(IT). This requirement by the China’s government has basically blocked the world’s most successful technology companies, from Google to Facebook to Amazon, from having a noticeable footprint in China.  In some sectors, China will only let foreign firms operate if, and only if, they agrees to operate through joint ventures in which the Chinese partners have the majority stake. Take the banking sector. To sell their services to Chinese customers, foreign banks often have to team up with local partners who add zero value to the operation. The case of technology companies is even worse: after sharing their technologies with Chinese partners, they (that is, the Chinese partners) often systematically reverse-engineer some of the same products and compete against the foreign companies.⁸ The clear consensus is that this is essentially an unfair trade practice.

Another way that China gets what it wants from foreign companies, particularly the U.S.  companies, is through cyber-theft. I know this may sound strange, but it is true. Russia is actually not the country that have waged the most extensive cyberwarfare against the United States. It is China, and the main targets are the U.S.  companies, whose secrets and IT are then shared with the Chinese competitors.⁹

It may also be stated that China is not alone in the game of trade cheating. India and Brazil are also trade cheats. In fact, a significant point to remember here is that Brazil and India teamed up with China to obstruct the last series of world trade talks known as the Doha Round.¹⁰ Today, these large countries who have refused to liberalize their economies and who also have enough power to hold firm, are the greatest threat to open world economy.

The Trump administration’s get-tough approach may not be perfect in terms of making China provide more market access to foreign businesses and do a better job of protecting intellectual property as required by WTO. According to President Trump, his government will focus on steel, slapping tariffs, alienating key allies and working outside WTO. This is not the wisest course; however, his administration’s frustrations is very understandable. In addition to exerting pressure privately, previous U.S. presidents have worked within the system and tried to get allies on board but their efforts never made China to change its behavior. Instead, it got worse. So, it is only natural for President Trump (and most Americans) feels that, without pressure, little progress will be made. Hence, even though many U.S. business leaders fear that across-the-board tariffs on a wide range of Chinese imports will hurt their bottom line and raise prices for the consumers, I am inclined to support President Trump’s unconventional approach, for one simple reason: for the past two decades, nothing else has worked.

References

¹Swanson, A., & Bradsher, K. (2018, April 5). Trump Doubles Down on Potential Trade War With China. New York Times. https://www.nytimes.com/2018/04/05/business/trump-trade-war-china.html

²U.S. Trade Representative (2018). 2017 Report to Congress On China’s WTO Compliance. Retrieved April 13, 2018 from https://ustr.gov/sites/default/files/files/Press/Reports/China%202017%20WTO%20Report.pdf

³Zakaria, F. (2018, April 5). Trump is Right: China’s A Trade Cheat. The Washington Post. https://www.washingtonpost.com/opinions/global-opinions/trump-is-right-chinas-a-trade-cheat/2018/04/05/6cd69054-390f-11e8-8fd2-49fe3c675a89_story.html?utm_term=.85595b5de9bd

⁴Ibid

⁵Ibid, para. 5

⁶Farley, R. (2014, October 29). Deadly Lessons: The Last Time China and America Went to War. The National Interest. Retrieved April 20, 2018 from http://nationalinterest.org/feature/deadly-lessons-the-last-time-china-america-went-war-11558

⁷Pickel, R. (2017, February 1). Millions Of US Jobs Lost To Trade With China, Study Shows. The Daily Caller. Retrieved April 20, 2017 from http://dailycaller.com/2017/02/01/millions-of-us-jobs-lost-to-trade-with-china-study-shows/

⁸Shane, D. (2018, April 5). How China Gets What It Wants From American Companies. CNN Money. Retrieved April 22, 2018 from http://money.cnn.com/2018/04/05/news/economy/china-foreign-companies-restrictions/index.html

⁹Zakaria, op. cit., para. 7

¹⁰Ibid

The Arab countries: sorrows, tears and blood

The Arab Countries

The Arab civilization used to lead the world. Today they are in ruins. The truth is, only the Arabs themselves can rebuild their countries.

The great cities of Baghdad, Cairo and Damascus took turns to race ahead of the western world about a thousand years ago. Without putting it in so many words, Islam and innovation were twins. In the past, the Arab caliphates were dynamic super powers. They used to be the beacons of learning, tolerance and trade. What do we have today? There is no way to sugarcoat it: the Arabs of today are in a wretched state. Today, the Middle East is held back by despotism and is convulsed by war, while the other parts of the world (including Asia, Africa and Latin America) are moving ahead.¹

About five years ago there was high hopes that the Arab people were at last going to reform the system under the current leaders and replace the authoritarian regimes that have been in power for decades with stable democratic systems. A wave of unrest across the region at that time led to the overthrow of four dictators – in Tunisia, Yemen, Libya and Egypt. Known as the ‘Arab Spring’² this uprising in the region also led to a clamor for change elsewhere, specifically in Syria. Unfortunately, the Arab Spring was both a failure and a disappointment, particularly to those people who hoped that it would lead to the removal of the corrupt leaders in the region as well as to instant improvement in living standards. Simply put, the Arab Springs’ fruit has rotted into renewed autocracy and war – a situation that had caused more chronic instability and additional strain on the already struggling Arab economies. It had also caused deep divisions to emerge between  the Moslems and secular Arabs. If the experience of the past few years teaches us anything, it is that the current situation in the Arab world has engendered  misery and fanaticism that today threaten the other regions of the world.

Two natural questions to ask at this point are these: why can’t Arab countries create democracy, happiness and wealth for their almost 400 million people? What made such a region of the earth with abundant natural resources to be so susceptible to authoritarian regimes and fanatics who seem to be bent on destroying them and their western friends? In a practical sense, it would be a complete fallacy to suggest that the Arabs lacks talent or that they are allergic to democracy. Far from that. But history and politics both shows that for the Arabs to wake up from their nightmare, and for the entire world to feel safe from the turmoil in Middle East, a great deal need to change in that part of the world.

The truth in black and grey

As far as the world knows, the Arab countries’ problems run so wide. Take Syria and Iraq, the two Arab countries that are always in the headlines of the popular media. These days both can barely be called countries in the real sense of the word. In 2014, a brutal brand of jihadists known as the ISIS(Islamic State in Iraq and Syria) declared the boundaries of these countries void. The ISIS jihadists made it clear to the world that they were devoted to establishing an Islamic state in that region. Even though ISIS is now realizing that developing and sustaining a caliphate is much harder than declaring one, their activities during that time  heralded  a new Islamic caliphate that would embrace Iraq, Syria, Israel-Palestine, Jordan, Lebanon, Turkey and, eventually, the rest of the world. In addition to killing non-Muslims not just in the Middle East but also in the streets of Paris, London and New York, its leaders inspires acts of terrorism around the world.³ Egypt went back to military rule after removing Hosni Mubarak, the countries military dictator for three decades, during 2011 revolution.⁴ Following the violent demise of Muammar Qaddafi, Libya is at the mercy of unruly militias. Yemen, one of the Arab world’s poorest countries, is beset  by insurrection, infighting, al-Qaeda, and by the war between forces loyal to the internationally-recognized government of President  Abdrabbuh Mansour Hadi and those allied to the Houthi rebel movement.⁵  In Palestine, the hope for peace and true statehood seems to have faded away.⁶ Other Arab countries like Saudi Arabia and Algeria are more fragile than they look, even though their regimes are awash with oil wealth and are propped up by an iron-fisted apparatus of state security. So far, the only Arab state that has a semblance of democracy is Tunisia.⁷

When we look at the Arab countries, we will not fail to observe that the main source of most of their current troubles is Islam, or at least the modern interpretations of Islam. Simply put, the development of independent political institutions in Arab countries has been stunted by the faith’s claim to combine spiritual and earthly authority, with no separation of mosque and state – a claim that is being promoted by many of its leading lights. Lets face it: modern day Islam is teeming  with a militant minority of Muslims. It is this militant minority within Islam that is the problem, simply because they had continued to seek and push for legitimacy through ever more fanatical interpretations of the Koran. Unfortunately, other Muslims have few choices than to seek refuge in their sect since doing otherwise means facing constant threats of militia violence and civil war.⁸ Today, plenty of Shias and Sunnis  in Iraq and Syria often resort to maiming each other. Surprisingly, these are two Muslim sects that used to marry each other. Sadly, this violent perversion of Islam that left these Arab countries in a sorry state has spread to places as distant as northern England and northern Nigeria.⁹

What is happening in the Arab countries today sits nicely with the notion that religious extremism is a conduit for misery, regardless of its fundamental cause. It is only fair to say that Islamic democracies in places like Indonesia and Malaysia are doing just fine. Not so in the Arab world due to the fact that the very fabric of the states in the region is weak. There is no way to sugarcoat this: only a few Arab countries have been nations for long. Fairness compels me to infer that the fall of the Turk’s Ottoman empire following the humiliation of British and French rule in World War I created a vast hole in that part of the world; and that hole  is only partly and inadequately filled by the successor states that came into being at the end of the empire. Thus, the colonial powers continued to control or influence events in much of the Arab world until the 1960s. The point to note here is that Arab nations has failed to build and nurture the institutional prerequisites of democracy – a free press, independent courts and universities, independent trade unions, the give-and-take of parliamentary discourse, protection for minorities and the emancipation of women.¹⁰

The absence of these prerequisites means the absence of a liberal state in the Arab world, and this has been matched by the absence of a liberal economy. Arab countries overwhelmingly embraced the central planning orthodoxy after independence. By adopting this political ideology, which was often inspired by the then Soviet Union, Arab governments  gradually and systematically strangled their economies through vigorous implementation of anti-market, anti-trade, pro-subsidy and pro-regulation policies. During that period till the present time, the Arab governments had pulled the levers of economic power, particularly in those Arab countries with oil wealth. Thus it is not surprising that  capitalism of the crony and rent seeking reigned in these Arab states as soon as the constraints of post-colonial socialism were lifted. In such a political environment, privatization worked only for the pals of the government. All these produced the ugly outcome that the Arab states are suffering today: they have virtually no free market and barely have any world class companies, which further implies that smart Arabs had had to move to America or Europe if they wanted to start or excel in business or scholarship.¹¹

With these ineffective and draconian policies precipitating economic stagnation in the region, the Arab people soon became dissatisfied with the falling living standards and the status quo in general. To protect themselves, the Arab monarchs and presidents-for-life used their secret police and goons. So the only source of public services and one of the few places where the Arab people could gather and hear speeches was the mosque. This did not only led to the radicalization of Islam but it also induced the angry Arab men who loathed their monarchs and the establishment in general to came to hate the Western countries that was backing them. Meanwhile the high unemployment rate in the region created even more insecurity and restlessness among a vast number of the Arab youths. The advent of the social media aggravated the situation since it revealed to these angry youths that the prospects of their cohorts outside the Middle East were by far more bright and hopeful. According to the available published evidence, the world was indeed not surprised that these youths took to the streets in the Arab spring. What surprised the world why they didn’t do so sooner than that.¹²

The danger of inaction

One thing is for certain: the ongoing bad situation in Arab countries cannot easily or rapidly be put right. Also, even though many outsiders have been drawn to the region as invaders or occupiers(including the American soldiers) they cannot simply stamp out the jihadist cause or impose prosperity and democracy in the region. The disastrous invasion and occupation of Iraq in 2003¹³ and Afghanistan in 2001 indeed showed that this is impossible.¹⁴ Any form of military support, including the supply of drones and of a small number of special  forces, may help to keep the jihadists at bay in the region. Such military support may have to be on permanent call in order to work. It should be noted here that while  ISIS’s proposed caliphate  is very unlikely to become a recognizable state, that does not mean that it will not continue to produce jihadists that could export terrorism for many years to come.

Again, only the Arabs can reverse the decline of their civilization and fix the miserable conditions in their countries. The way things are moving in the region shows that there is little hope of that happening. The extremists in the region, with all their rhetoric and promises of establishing a caliphate, offer no solution to Arab problems either. They had only succeeded in making Arab citizens and politicians not to engage with one another reasonably or respectfully on substantive issues of public importance. Meanwhile, the mantra of the military strongmen and monarchs in the region is “stability.” Naturally, stability has strong appeal in a time of chaos. But the truth is that their model for pushing for that stability in the region, which involve the use of repression and stagnation, are not the solution. That model have been used before and the bottom line is that they don’t work. As a matter of fact, repression and stagnation were at the root of the current problems in the region. It is true: the Arab awakening is over, at least for the moment. Nevertheless, the powerful forces that gave rise to it are still present. Not only that, the social media which stirred up the Arab spring cannot be un-invented. One thing the Arab leaders and their Western backers must know is that stability requires reform – the two goes together.

So, does that mean that the Arab situation is hopeless then? Absolutely not. Today, the region is a bloody mess. But ultimately fanatics like the ISIS often devour themselves due to their paranoid style of achieving their agenda, which leaves no recourse to political compliance. Meanwhile, secular Sunnis comprise the majority of Arab Muslims. They may one day need to make their voices heard. They will need to cast their minds back to the values that once made the Arab world great when their moment comes. In the past, education made the Arabs to excel in medicine, astronomy, mathematics and architecture. Trade with other parts of the world generated the revenue they used to pay for their fabulous metropolises and their spices and silk. There was also a time when the Arab world was a cosmopolitan haven for Christians, Jews and Muslims of all sects. During that time, tolerance reigned in the region and this tolerance fostered creativity and invention.¹⁵

Education, pluralism and open markets were once Arab values. The bottom line is that the Arabs can adopt these values again if they want to. But these values could be only wishful thinking if the Sunnis and Shias continue to tear out each other’s throats, particularly in Iraq and Syria. And for a people whom so much has gone so wrong, bringing back  such values would be a small price to pay for restoring political and economic stability and prosperity in the region.

References

¹Leaders: The Tragedy of the Arabs. (2014, July 5). The Economist, pp. 9-10.

²Arab Spring: 10 Unpredicted Outcomes. (2013, December 13). British Broadcasting Corporation. Retrieved May 10, 2017 from http://www.bbc.com/news/world-middle-east-25212247

³Greene, R. A., Thompson N. (2016, August 11). ISIS: Everything You Need to Know. Cable News Network. Retrieved May 13, 2017 from http://www.cnn.com/2015/01/14/world/isis-everything-you-need-to-know/

⁴Aspden R. (2016). Generation Revolution: How Egypt’s Military State Betrayed Its Youth. The Guardian. Retrieved May 13, 2017 from https://www.theguardian.com/news/2016/jun/02/generation-revolution-egypt-military-state-youth

⁵Yemen Crisis: Who is Fighting Whom? (2017, March 28). BBC News, pp. Retrieved May 13, 2017 from http://www.bbc.com/news/world-middle-east-29319423

⁶Leaders: The Tragedy of the Arabs, op. cit., p.9

⁷Ibid

⁸Ibid

⁹Ibid

¹⁰Ibid

¹¹Rivlin P.(2001). Economic Policy and Performance in the Arab World. Boulder, Colorado: Lynne Rienner Publishers Inc.

¹²Leaders: The Tragedy of the Arabs, op. cit., p.9

¹³Leaders: The Tragedy of the Arabs, op. cit., p.9

¹⁴Afghanistan Profile - Timeline. (2017, March 8). BBC. Retrieved May 19, 2017 from http://www.bbc.com/news/world-south-asia-12024253

¹⁵Williams, E. (2012, May). Trade and Commercial Activity in the Byzantine and Early Islamic Middle East. Retrieved from Heilbrunn Timeline of Art History: http://www.metmuseum.org/toah/hd/coin/hd_coin.htm

Self-driving cars

Self-Driving Cars

Believe me, I think it is stupid (excuse my language) to drive a car you need to take control over only when it is about to crash. I mean, you may be reading a book, watching a YouTube video in your phone or may have even dozed off, lulled into a dangerous complacency by the fact that your semi-automated car will work just fine in most road situations. Then suddenly your car’s electric horn rings telling you to take over the steering wheel right now. If my vote counts for something, I would say that’s not a good way to avoid crashing your car.

In May 2016, the driver of a Tesla using Autopilot died in a car crashed in Florida. His car collided with a lorry turning across the road in front of him.¹ Generally speaking, Autopilot users are expected to keep their hands on the wheel and their eyes on the road. Nevertheless, Tesla’s Autopilot definitely failed this driver since for some reason its cameras and radar did not spot the lorry, or perhaps, they saw the lorry but thought it was something else, for instance, an overhead sign. In any case, the point I’m trying to make here is that self-driving cars are like moving computers, and like all computers, they can sometimes experience some type of unexpected glitch that can cause them to malfunction or stop altogether. So you can imagine what will happen if this malfunction happens when the car is traveling at high speed on a highway.  

Whiff of danger

Believe me, I think it is stupid (excuse my language) to drive a car you need to take control over only when it is about to crash. I mean, you may be reading a book, watching a YouTube video in your phone or may have even dozed off, lulled into a dangerous complacency by the fact that your semi-automated car will work just fine in most road situations. Then suddenly your car’s electric horn rings telling you to take over the steering wheel right now. Naturally, since you haven’t been paying attention it will take at least a few vital seconds for you to come to your senses and figure out why your car’s computer panicked and alerted you to take control of the wheel immediately. And by that time a lot of things would have happened. You will be one of the luckiest people if you didn’t hit anything or someone before you take full control.

Despite these dangers, it is amazing that the move toward full self-driving capability is the future which a lot of automakers are aiming for. Take Audi – the German automaker owned by Volkswagen Group. The company had continued to add features that allow for mostly hands-free driving on places limited to access highways.² According to Rupert Stadler, Audi AG CEO:

"We see the potential for highly automated driving also in the city, where traffic is highly complex; this is the ultimate test for us…In the next decade, we will also have robot taxis. They will close the gap in urban public transport. We will first experience cars without a steering wheel and pedals on predefined short journeys."³

How about Ford? Don’t ask. The company is teaming up with Argo (an artificial intelligence company) and Google to manufacture fully autonomous vehicles.⁴ The plan is to make vehicles that operate within specified areas, including ride-hailing services in cities. But their long-term goal is to eventually make vehicles that will safely roam free on America’s roads and streets.⁵ Other auto-makers, as well as many tech companies in Silicon Valley, are also rushing to get autonomous vehicles on the road.

What’s the point?

So, why am I writing this? Because I am convinced that self-driving cars will be a big safety problem. Just consider this: imagine you are driving to a party with your beautiful boyfriend or girlfriend. Or wife, whatever. As you are getting close to an intersection, the traffic light changed to red. Not a problem. But then a large truck carrying fuel suddenly ignites in front of you. If you don’t act fast before the truck explodes, which it can do any moment, you may suffer severe burns. You wanted to reverse your car but can’t do that either because there is a long line of traffic behind you. On the side of the road is an open field and naturally, you would want to quickly drive your car into the field hoping to get as far away as possible from the burning truck. You immediately turned your car towards the field and pushed your accelerator down to the floor. The car jumped into the field and you are safe at last. Now imagine a similar situation, except for one difference: this time you and your girlfriend or boyfriend are sitting in a driverless car. The way the car was built, it can only obey traffic rules. Not only that, it is programmed to drive only on the road. This means that it cannot go into the field even if you want it to do so. It also cannot go backward.⁶ It must follow the traffic rules even though in your situation following these rules crucify you. So, what will you do? Your guess is as good as mine. It is like having a ‘baptism by fire’.

Let’s consider another problem that driverless cars may have: hacking. The unhappy truth is that the problem of hacking also applies to modern cars as well. So you could be at risk of getting hacked if you drive around in a car that is fully loaded with as many gizmos as an intergalactic spaceship. I sometimes remember the good old days when cars were just an engine with a driver. Well, those days are gone. Sorry about that. The cars we have today are basically computers on wheels. Again, one problem of such modern cars is that they can be hacked. As Andy Greenberg, a journalist, puts it in his 2016 article in Wired magazine:

“Almost exactly a year ago, Chrysler announced a recall for 1.4 million vehicles after a pair of hackers demonstrated to WIRED that they could remotely hijack a Jeep’s digital systems over the Internet. For Chrysler, the fix was embarrassing and costly. But now those two researchers have returned with work that asks Chrysler and the automotive industry to imagine an alternate reality, one where instead of reporting their research to the automaker so it could be fixed, they had kept working on it in secret—the way malicious hackers would have. In doing so, they’ve developed a new hack that offers a sobering lesson: It could have been—and still could be—much worse.”⁷

The bad news about car hacking has continued to get worse. In 2015, a Jeep Cherokee in St. Louis (Missouri, United States) was wirelessly hacked from Pittsburgh. Because of similar vulnerabilities, Nissan shut down its Leaf App. In just one month in 2016, a pair of hackers in Houston, Texas, stole more than 30 Jeeps.⁸ The scary story is endless. So you can begin to imagine what a hacker or a cyber-terrorist could do to a driverless car. It is very scary! Now don’t listen to those ‘computer wizards’ who claim that modern computer systems are as secure as a bank.    Remember: they said that about the Ashley Madison website – a dating website for married people or people in a committed relationship. We all know what happened to the users of that website.⁹

Another important area to look at is employment: as more and more self-driving cars appear on the roads, many jobs could be lost. In other words, as self-driving cars or driverless cars becomes more popular, many people who make an honest living by driving things around will lose their jobs. Some of the jobs that will be affected in that regard include taxi, bus and truck drivers’ jobs, waste disposal and home delivery drivers.¹⁰  Thus while self-driving cars might make public transportation cheaper, it could also result to more people being pushed into the far corners of poverty. It should also be noted here that if people just bought self-driving cars instead of using the bus, there may not be a public transport system at all. We all know what the result will be: people will become less sociable in the future since they will be secluded in the miserable cars that ferry them around like kids.

Well, how about the loss of the enjoyment that one derives from driving a car? Forget about it. I don’t know about you guys but I do get a sense of freedom and liberation each time I drive my car. I am very sure that I will not get that with a self-driving car. People like me love cars a lot, for two main reasons. First, because they can take me to my destination quicker and conveniently. Second, they make me feel good about myself when driving them.  Of course, everyone may not be like me. One thing I do know is that a lot of people will agree with me if I say that there’s fun in driving along a scenic route as the sun sets in the sky. You see things as you get to and pass them, you drive to different places that you love, more importantly, you are doing it at will. On the contrary, you wouldn’t find that drive along the scenic route, or by the lake in your neighborhood to be that exciting if your car just did it on its own, taking routes you don’t like, making stops you have no interest in, and so on.

Stay scared

Well, what do you say?  I will help you here: when more and more things in our lives get automated, I mean things as simple as the automobiles, we will soon begin to use less of our brains. This will eventually degrade our ability to think and act for ourselves. It is worth bearing in mind that our brains is what distinguishes us from the rest of the living things on earth. So I think we should be concerned about what will happen when our brains become less active. In my opinion, if we allow our brains to go idle then we will quintessentially become more of an animal or regress back to the Stone Age.

Human beings have indeed come a long way since the invention of cars. We have explored previously unknown regions of the earth and we have landed on the moon. We have also had two world wars, and so on. All these times, the basics of the car has never changed one bit. Of course, cars are now safer, faster and more efficient, which is good. All this time, the key aspect of the car is still the same: a car and its driver. It is good to remember that we had horses and riders even before the cars and this natural order had been like this for years because there is nothing wrong with it. As dumb as I am, I find it really hard to trust an artificially created mix of wires and electricity called self-driving cars with my life.

References

¹Driverless Cars: Eyes on the Road. (2016, December 24). The Economist, pp. 111-112.

²Korosec, K. (2017, March 15). Why Audi Created a New Business Devoted to Self-Driving Tech. Fortune, Retrieved April 29, 2017 from http://fortune.com/2017/03/15/audi-self-driving-car-business/

³Ibid, para. 4

⁴Ford (2017). News. Retrieved April 30, 2017 from https://media.ford.com/content/fordmedia/fna/us/en/news/2017/02/10/ford-invests-in-argo-ai-new-artificial-intelligence-company.html

⁵Bailey, R. (2016, August 26). Self-Driving Cars: Half-Assed Automation Is Stupid and Dangerous. Reason Foundation. Retrieved April 29, 2017 from http://reason.com/blog/2016/08/26/self-driving-cars-half-assed-automation

⁶Car Throttle (n.d.). Why Driverless Cars Should Be Banned. Retrieved April 30, 2017 from https://www.carthrottle.com/post/we3yp99/

⁷Greenberg, A. (2016, August 1). The Jeep Hackers Are Back to Prove Car Hacking Can Get Much Worse. Wired, pp. Retrieved April 30, 2017 from https://www.wired.com/2016/08/jeep-hackers-return-high-speed-steering-acceleration-hacks/

⁸Auto Blog(2016). Hackers Arrested After Stealing More Than 30 Jeeps in Texas. Retrieved April 30, 2017 from http://www.autoblog.com/2016/08/04/hackers-steal-30-jeeps-houston-texas/

⁹Hosie, R. (2017, January 16). Ashley Madison Hacking: What Happened When Married Man Was Exposed. Independent. Retrieved April 30, 2017 from http://www.independent.co.uk/life-style/love-sex/ashley-madison-hacking-accounts-married-man-exposes-cheating-website-infidelity-rick-thomas-a7529356.html

¹⁰Car Throttle, op. cit., para