Paradox of Plenty

Nomura Asset Management U.K. Limited Dubai branch September 2nd , 2019
Tarek Fadlallah, CFA
Chief Executive Officer
Nomura Asset Management
Middle East
P.O. Box 506882
Dubai, UAE
Tel: +971 4 428 4587
www.nomura-asset.co.uk
September 2nd, 2019
The Arabian Markets
Highlights:
 US equity markets have done
very well but the MSCI World
(excluding US) has been subdued
and remains 20% below its peak
 The outlook for the twenty-
twenties is distinctly ominous for
China, Europe, UK and US
 Fiscal measures and unorthodox
monetary tools might help
temporarily but can only delay
the day of reckoning
 The TASI is up 3% following a
massive inflow of foreign money
but the index trade is over
 There are at least seven signs
that could limit the scale of the
economic rebound and make it
difficult for the stock market to
move higher
 Keeping a lower risk profile is
one way to mitigate the dangers
but optimizing portfolios to
benefit from falling interest rates
and avoiding cyclicals is another
Content:
Borrowed Time 2
The Indexation Gift 3
The Seven Signs 4
Micro-Disorder 5
Silver Lining 8
Bottom Line 9
Appendix: Globalization 10
Market Commentary — a product of Sales and Marketing and not Investment Research or Advice
Nomura Asset Management U.K. Limited Dubai branch is regulated by the Dubai Financial Services Authority
The Paradox of Plenty

Page 2
Borrowed Time
Belying an ever-growing list of uncertainties and negative developments that threaten global prosperity,
world stock markets have risen this year with the irrepressible S&P index (+16.7%) leading the way.
The performance of the US stock market has been excellent and
had an outsized impact on the global indices in which it is included.
The MSCI GCC index is up over 3%, slightly behind the MSCI index
for BRIC but bettering the index for Asia and Japan’s Topix index.
The Saudi TASI is well off its year highs but is still up 2.5% following
a massive inflow of foreign money. It has been a relative haven amid
concerns across many Emerging and even Developed markets.
While bulls argue that we are climbing a wall of worry, the reality is that the outlook is deteriorating daily,
and that asset prices are being sustained primarily by the intoxicating drug of monetary easing.
Eleven years after the global financial crisis the major central banks are walking back on tentative attempts
to normalise monetary policy by extending what were supposed to be ‘emergency’ measures that forcibly
suppress interest rates and add trillions to their balance sheets.
Despite these drastic efforts and the
rather appealing equity earnings yields
of over 6% the overall impact on stock
markets has been relatively limited.
The MSCI World index (ex-US) is 20%
below it all-time highs despite the vast
sums spent on resuscitating the
markets since the financial crisis, and
has risen a miserly 12% this century!
The MSCI World index (including US)
is up 53% largely due to the enormous
impact of a handful of FAANG stocks.
The outlook for the twenty-twenties is distinctly ominous with China facing multiple headwinds, Brexit yet
to take its toll, Japan and South Korea bickering, Europe’s prognosis gloomy and US debt ballooning.
Although common sense suggests diplomatic outcomes to ongoing disputes, the lurch towards nationalism
bodes poorly for international economic development. Just as globalisation contributed to increased trade,
prosperity and peace, de-globalization will necessarily have the opposite effect.
Additional policy solutions that include extraordinary fiscal measures to supplement unorthodox monetary
tools may help temporarily, but can only delay the day of reckoning.
If Japan is indeed the model for what to expect next then prepare for years of low growth, asset deflation,
negative interest rates and an investment philosophy based on capital preservation. Cash is king.
Source: Bloomberg
12%
53%
-60%
-40%
-20%
0%
20%
40%
60%
01/01/2000 01/09/2002 01/05/2005 01/01/2008 01/09/2010 01/05/2013 01/01/2016 01/09/2018
FAANG EFFECT
MSCI World (ex-US) MSCI World
Source: Bloomberg
Stock Index YTD %
S&P Index 16.7
MSCI World 12.1
MSCI World (ex-US) 8.0
MSCI BRIC 5.3
MSCI GCC 3.1
Saudi TASI 2.5
MSCI Asia (ex-Japan) 2.1
Topix Japan 1.2

Page 3
The Indexation Gift
Index providers gifted investors in Saudi Arabia a road map to profits by publishing lists of stocks they
intended to include with precise dates and values, in a well telegraphed move that investors could not miss.
Active investors have also been raising their holding, partly through fear of running large tracking errors
against their shifting benchmark, but seemingly with minimal conviction.
The average price gain for stocks included
in the MSCI index has been 12% compared
to an overall TASI increase of less than 3%.
The banks registered strong gains during
the index buying spree but have fallen back
sharply in the past couple of weeks.
Overall the gains have outpaced earnings
and PER multiples have expanded from less
than 11x to over 13x leaving them trading
around 4% above the two year PER average.
The market cap of the 10 banks in the index
stands at $170 billion — with Al Rajhi and
NCB accounting for nearly half that value.
The MSCI trade has led to some bizarre
price movements such as the 41% increase
in the value of Saudi Electricity Company
which now has a PER of 209x.
And the Saudi Telecom Company is up 12%
despite profits falling over the past five year.
Notwithstanding the intermittent rallies it is important to note that the TASI has been in a bear market
which technically dates back to February 2006 (peak of local bubble) but more reasonably to January 2008.
Given this backdrop it requires a leap
of faith to imagine that the TASI might
break out to the upside without a
pivotal development in economic
conditions or business environment.
The index is more likely to remain
range bound with a downside bias to
test support after its recent rally.
Technical and fundamental analysis is
consistent with support at 7,000 and an
outlook predicated on oil prices.
Source: JP Morgan, MSCI, Bloomberg, NAM
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
11/01/2007 11/01/2009 11/01/2011 11/01/2013 11/01/2015 11/01/2017 11/01/2019
TASI's Lost Decade
Source: Bloomberg
Global Financial Crisis Oil Shock
Security Name YTD PER PBR MarketCap ($M)
Saudi Basic Industries Corp -12.5 20.2 1.8 79,920
Saudi Telecom Co 12.7 17.5 3.2 52,800
Al Rajhi Bank 10.8 14.0 3.0 40,333
National Commercial Bank 3.5 13.5 2.4 38,120
Saudi Electricity Co 41.2 209.7 1.2 22,777
Saudi Arabian Mining Co -10.1 154.3 1.8 13,804
Samba Financial Group -4.1 11.5 1.3 15,307
Almarai Co JSC 4.7 25.8 3.5 13,213
Riyad Bank 33.8 13.5 1.9 20,480
Saudi British Bank 2.1 13.6 1.2 17,534
Yanbu National Petrochem -11.2 18.1 1.9 8,040
Banque Saudi Fransi 16.4 13.1 1.3 11,250
Arab National Bank 15.7 10.4 1.3 9,440
Alinma Bank -0.3 12.1 1.6 8,800
Saudi Arabian Fertilizer Co 6.0 18.2 4.5 8,778
Rabigh Refining & Petro 3.9 199.1 1.6 4,630
Saudi Kayan Petrochem -20.5 NA 1.0 4,200
Savola Group 16.6 NA 2.3 4,450
Jarir Marketing Co 5.9 20.5 12.2 4,973
Etihad Etisalat Co 49.9 121.7 1.4 5,105
National Industrialization -9.7 28.2 0.9 2,437
Bank AlBilad 21.8 16.3 2.2 5,240
Saudi Industrial Investment 1.5 13.4 1.4 2,616
Dar Al Arkan Real Estate 28.2 77.0 0.7 3,329
Bank Al-Jazira -0.8 10.9 1.0 2,952
Advanced Petrochemical Co 15.1 15.3 3.4 2,939
Emaar Economic City 26.4 NA 1.1 2,267
Co for Cooperative Insurance 9.8 NA 3.9 2,207
Saudi Cement Co 35.6 22.6 3.8 2,554
Saudi Airlines Catering Co 13.2 16.3 5.5 1,913
Bupa Arabia 29.6 21.6 4.3 3,309
Southern Province Cement 52.6 28.8 2.4 2,053

Page 4
The Seven Signs
The ongoing transformation in Saudi Arabia cannot be overstated — a program of social and economic
reforms that has already reduced wasteful spending, increased fiscal transparency and led to supportive
business reforms, rising female workforce participation and the emergence of entirely new industries.
After a difficult 2018 the data this year paints a broadly brighter picture with demand for cement rising,
ATM withdrawals increasing, credit card purchases recovering and mortgage loans soaring.
But doubts remain over whether the economy is robust enough, and what additional catalysts might be
required, to sustain the momentum.
Furthermore, there are at least seven signs that could limit the scale of the economic rebound and make it
difficult for the stock market to move higher despite the fifteen percent correction since May.
1. Global Slowdown
There is a consensus that the global economy is slowing and that it will have an adverse impact on cyclical
stocks (e.g. energy, materials, commodities) and resource-dependent economies, including the GCC.
2. Diversification Challenges
The Paradox of Plenty states that countries with an abundance of natural resources tend to have lower
economic growth and less successful development results than those with fewer resources.
Despite the billions spent in the quest for diversification, the oil sector’s contribution to Saudi GDP has
been decreasing slowly over the past thirty years (see the green segment below).
The current efforts to wean the country
off its oil addiction is arguably the most
serious and likely to yield better results.
Nonetheless, diversifying the economy
requires simultaneously overhauling a
bloated public sector as well as a private
sector that’s highly dependent — directly
and indirectly — on oil related spending.
Reform and the withdrawal of subsidies
is clearly the right strategy but has hurt
businesses that formed the backbone of
the non-oil economy for many years.
The risk is that the non-oil sectors will come under pressure in the near term as the economy transitions
from one model to another. Until then it is essentially stuck between a rock and a hard place.
Moody’s expects the economy to grow at between 2% to 2.5% over the next five years — a level that is
well below the rate required to address the ambitious diversification objectives. It’s a difficult journey.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Saudi GDP Composition
Oil Sector Private Sector Government Sector
Source: SAMA, NAM
Reduced oil dependence?

Page 5
3. Micro-Disorder
i. Narrowing Bank Spreads and Falling Petrochemical Margins
A key reason for being bullish the TASI over the past two years was the attractive valuations and business
prospects for the banking sector.
However, the run-up in stock prices has
seen multiples expand and the decline
in SIBOR rates is expected to hurt net
interest margins going forward.
Lower profits among the petrochemical
companies has also been damaging to
their stock prices — the TASI Materials
Industry Group is down 4% this year
and by 13% over the past year, yet
trades on a lofty PER above 25x.
Marmore MENA Intelligence forecasts aggregate GCC profits declining by 1.8% this year with 76 banks
accounting for an overwhelming 57% of combined profits among the 696 listed firms in the survey.
Profits in Saudi Arabia are expected to decline by 6.1% led by a double-digit drop in the petrochemical
sector — profits across the 59 regional commodity/petrochemical firms are forecast to decrease –26.2%
while banking profits are set to rise by a modest 3.7% compared to a 13.1% increase last year.
These forecasts confirm the ongoing struggle for sustained profitability at non-bank corporations, raises
questions about market valuations and reduces the scope to rally.
ii. Incrementalism & Corporate Inertia
Small and Mid-sized Enterprises (SMEs), particularly those reliant on subsidies or cheap expatriate labour,
have been decimated but the cost was a necessary step in dismantling widespread economic dependency.
However, there are still too many subscale businesses that are being sustained by intransigent managers
and deep pocketed owners, and that need to find long term solutions to their suboptimal operations.
Although the M&A statistics appear encouraging, they are heavily skewed by mergers among large financial
institutions where a common shareholder (e.g. government) has directed the consolidation.
The unravelling of a proposed merger between dairy companies NADEC and Alsafi is frustrating and
underscores the difficulties in executing essential consolidation even among sophisticated parties.
Until there is evidence of sweeping merger activity, it is difficult to buy into the idea of transformation
within the private sector where change has been incremental and inconsequential.
Source: Marmore, a subsidiary of Markaz, Kuwait Financial Centre
16.4
13.2
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
05/01/2017 05/07/2017 05/01/2018 05/07/2018 05/01/2019 05/07/2019
TASI Banks PER SIBOR 3M (rh scale)
BUY
Source: Bloomberg
BUY
Source: Bloomberg
BUY
Source: Bloomberg
BUY
Source: Bloomberg
12.7
Profits Saudi Arabia UAE Kuwait Qatar Bahrain Oman GCC
YoY -6.1% 2.0% 4.4% -2.8% -6.8% 9.5% -1.8%

Page 6
4. Valuation, Vulnerability and Volatility
Compelled to purchase stocks by index providers, foreigners helped propel the TASI up as much as 19%
earlier this year but prices have retreated substantially since May.
While Saudi Arabia’s inclusion in the global indices is positive, it provides no guarantees about the market’s
performance in the future and leaves it vulnerable to shifts in foreign investor sentiment.
Moreover, markets that rise in advance, or during period of index inclusion, are often followed by periods
of underperformance, especially if price increases are not supported by fundamentals. Since being upgraded
to MSCI Emerging Markets in May 2014 the UAE Index, for example, is down around 40% and Qatar 20%.
The Saudi market is already overvalued
on most conventional measures, and
although this alone is not a sufficient
justification to sell, it provides a reality
check to manage expectations.
Compared to its own PER history the
TASI is trading at 19.7x which is 14%
above the ten-year average of 17.2x.
Against the MSCI EM index the TASI
appears to be overvalued by around
12% over the same period.
This analysis is consistent with other methodologies that explain the correction in the TASI from its highs.
Despite the large foreign inflows and
price increases, the traded volumes on
Tadawul have been on a downward
trajectory over the past two years.
Rising prices and moderating volumes
suggest a lack of investor conviction.
Such divergence is typically a negative
indicator of the underlying health of a
financial market and often precedes
periods of weakness.
5. Geo-political Deterrent
Hopes for a ceasefire in Yemen or a resolution to the intra-GCC dispute with Qatar have been dashed.
Indeed the geopolitical climate in the region has arguably worsened amid tightening sanctions on Iran and
deteriorating security in the Straights of Hormuz.
Given the fierce global competition for foreign direct investment such uncertainties present a potential
deterrent to foreign companies seeking to commit substantial capital into the region.
5,000
6,000
7,000
8,000
9,000
0
50
100
150
200
250
300
350
400
450
500
15/09/2015 15/05/2016 15/01/2017 15/09/2017 15/05/2018 15/01/2019
Volume (mn) TASI (rh scale)
Source: Bloomberg
19.7
17.2
0.0
0.5
1.0
1.5
2.0
2.5
6
10
14
18
22
26
03/01/2008 03/01/2010 03/01/2012 03/01/2014 03/01/2016 03/01/2018
Price to Earnings Ratio & MSCI EM Relative Ratio (rh scale)
KSA KSA Average
TASI/MSCI EM TASE/MSCI EM Average
Source: Bloomberg, NAM
SELL
BUY

Page 7
6. Marginal Buyers/Sellers
The index ‘inclusion trade’ was particularly potent because foreigners had been net sellers at the end of
2018 on perceived geo-political risks and were compelled to buy at higher prices as the inclusion dates
approached in May and August 2019.
In addition regulators have been making
it easier for foreign institutions and
strategic buyers to access the markets.
As a result, the accumulated asset
purchases by foreigners this year has
exceeded SAR 67 billion ($18 billion).
With the mandatory index purchasing
phase essentially over it is expected
that the pace of foreign buying will ease.
Amid peaking foreign buying and unrelenting selling by retail investors who will be the new marginal buyer?
7. Demand Destruction for Oil
There is a huge worldwide movement fighting climate change through policies designed to promote zero
carbon solutions — unambiguously bad news for hydrocarbon economies.
Simultaneously, advances in battery technology and the declining total cost of ownership imply a looming
inflection point in demand for Electric Vehicles. In Norway — which has combined economic, social and
political considerations into its transportation policy — around half of cars sold this year will likely be EVs.
There is so much focus on Tesla’s fortunes but there will be dozens of EV offerings from existing and new
players in the auto industry over the next few years. Each new model will be incrementally cheaper, charge
its batteries quicker and drive a little further. The implications for oil demand are frightening.
Indeed there are suggestions that worldwide sales of passenger cars have already peaked with last year’s
numbers below 2016 levels and expected to decline again as Chinese and US demand wanes.
A recession in 2020 or 2021 could deal a decisive blow to gasoline powered Internal Combustion Engines
(ICE) with demand recovery thereafter being satisfied by the flurry of new EVs coming onto the market.
Demand destruction in oil may not begin in earnest for another three or four years but with markets well
supplied, growth slowing and the war on carbon intensifying, the upside to prices appears to be capped.
Arcane Capital Advisers, a Singapore-based investor in renewable energy, predicts that EVs will reduce
transportation demand for oil by 5 million barrels per day by 2025.
The fear is that buying a gasoline powered ICE car in ten years may be as outdated as a transistor radio.
Source: International Organization of Motor Vehicle Manufacturers
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
49,654,985 55,818,570 57,839,953 60,936,407 63,429,200 65,708,230 66,314,155 69,464,432 70,694,834 68,690,468
Global Passenger Car Sales
-8,000,000
-6,000,000
-4,000,000
-2,000,000
-
2,000,000
4,000,000
6,000,000
8,000,000
-6,000,000
4,000,000
14,000,000
24,000,000
34,000,000
44,000,000
54,000,000
64,000,000
03/2017 07/2017 11/2017 03/2018 07/2018 11/2018 03/2019 07/2019
Foreign Buying (SAR 000s)
Accumlated Assets Weekly Net Buying (rh scale)
Source: Bloomberg

Page 8
Silver Lining
Keeping a lower risk profile is one way to mitigate the lurking dangers into the year-end but optimizing
portfolios to benefit from falling interest rates while avoiding cyclical sectors is another strategy.
The UAE economy in particular is likely to benefit from looser monetary policy given its reliance on the
real estate and retail sectors that will get some much needed relief.
Residential housing prices and commercial rents have fallen and while oversupply in real estate persists,
values have become attractive — Knight Frank estimated average prime price in Hong Kong at $4,251 per
square foot in 2018 compared to $3,033 in London, $2,989 in New York and just $625 in Dubai.
Stability in the real estate sector is a precondition for an economic recovery and reversing the increase in
property taxes and tighter mortgage regulations that were imposed a few years ago would be very helpful.
The UAE cannot escape the impact of lower oil prices but its diversification efforts continue to position it
as the hub for non-oil related activity and from where many pan-regional businesses are emerging.
Uber’s astonishing purchase of Careem has validated the UAE’s up-and-coming eco-system for start-ups.
The creation of such a large company in less than seven years is a boost for venture capital and private
equity after a slew of bad news over the last year.
Unfortunately Careem could not list on the local exchanges due to requirements that are prohibitive to
loss-making companies but at the reported $3.1 billion valuation Careem would have had a capitalization
similar to Aramex and DAMAC combined!
Careem disrupted the transportation sector and there is scope for entrepreneurs to do the same in other
industries so long as they are not stifled by regulation and bureaucracy.
There’s a lot of money going into promoting start-ups in the hope that they will create employment but
most new businesses fail and it would be wrong to rely too much on entrepreneurs to save the economy.
Instead, existing firms whose business models have been validated should be encouraged and supported
through continuous deregulation and greater access to alternative sources of capital.
The absence of a sophisticated or deep market for financing private companies has led to a lack of working
capital and scarcity in growth capital funding.
Financial deregulation in the gulf has been valuable to the public markets but less so to the private markets
which helps fund an increasingly significant portion of companies around the world.
Non-Bank Financial Companies (NBFCs) typically fill gaps in which banks are reluctant to operate due to
stringent regulations, capital adequacy constraints, risk appetite or a lack of expertise.
The scarcity of non-bank financing has led to a shadow credit market among commercial firms that causes
debilitating payment delays when the economy sours, destroying both good and bad businesses.
Developing NBFCs requires significant changes to the regulatory and legal regimes to enforce contracts,
improve debt collection procedures and the appropriation of pledged collateral.

Page 9
The Bottom Line
At the regional level there is still a lot of economic work to do and a need to see the big picture instead of
the maintaining a narrow emphasis on domestic markets and local solutions.
In July, for example, the African Union moved closer to an African Continental Free Trade Area [AfCFTA]
that will create a $3.4 trillion trading bloc consisting of 1.4 billion people across 55 countries. Also in July
the EU which already has 36 free trade agreements, agreed a deal with the South American Mercosur bloc.
Meanwhile bureaucrats in the region seeking national solutions wonder why trade volumes have stalled and
why foreign direct investment is low. Greater economic cooperation across GCC/MENA is not a choice.
Trump’s obsession with the stock market and his eye on the next election suggests that he will accept a
deal with China soon and spin it as a win, but the damage is done, confidence is shot and distrust prevails.
Attractive equity yields (high spreads versus bonds) and creative fiscal responses to revive demand may
encourage investors to keep faith with equities but negative bond yields are telling a more sinister story.
All the while, financial imbalances are being amplified by evermore experimental monetary policies whose
ultimate impact is unknown and potentially catastrophic. It’s confusing and frightening.
Bank of England Governor Mark Carney summed it up well: “past instances of very low interest rates have
tended to coincide with high risk events such as wars, financial crisis, and breaks in the monetary regime.”
It’s not a coincidence, Mark!
Happy investing.
Tarek Fadlallah, CFA
Disclaimer: Nomura Asset Management U.K. Limited, Dubai Branch trading as Nomura Asset Management Middle East (“NAM Middle East”)
in the Dubai International Financial Centre ("DIFC") (Registered No. CL1563) is regulated by the Dubai Financial Services Authority ("DFSA").
NAM Middle East may only undertake the financial services activities that fall within the scope of its existing DFSA licence. This is not invest-
ment research as defined by the DFSA. Related financial products are intended only for a ‘Market Counterparty’ or a ‘Professional Client’ as
defined by the DFSA and therefore no other person should act upon it. The information is not intended to lead to the conclusion of a con-
tract of any nature what so ever within the territory of the DIFC. The recipient of the information understands, acknowledges and agrees that
the contents of this document have not been approved by the DFSA or any other regulatory body or authority in the United Arab Emirates.
Nothing contained in this report is intended to constitute ‘Advising on Financial Products' or 'Arranging Deals in Investments’ as defined by the
DFSA and is not intended to endorse or recommend a particular course of action. By accepting to receive this document, you represent that
you are a’ Market Counterparty’ or a ‘Professional Client’ and you agree to be bound by the foregoing limitations. Information contained
herein is provided for informational purposes only, is intended solely for your use and may not be quoted, circulated or otherwise referred to
without our express consent
This report was prepared by NAM Middle East, a branch of Nomura Asset Management U.K. Limited (“NAM UK”) from sources it reasonably
believes to be accurate. The contents are not intended in any way to indicate or guarantee future investment results as the value of
investments may go down as well as up. Values may also be affected by exchange rate movements and investors may not get back the full
amount originally invested. The views expressed in this Market Commentary are those of the author and do not necessarily
represent the views of NAM Middle East or NAM UK. Before purchasing any investment fund or product, you should read the related
prospectus and/or documentation in order to form your own assessment and judgment and, to make an investment decision. NAM UK is
authorised and regulated by the Financial Conduct Authority in the United Kingdom. Prices correct at time of research and may be volatile.

Page 10
Appendix — Globalisation 2.0
Globalization is under attack on multiple fronts and was dealt a blow earlier this year after several high
profile cancellations from the annual gathering of global leaders at its spiritual home in Davos.
Multilateral institutions, whether it’s the World Economic Forum, the United Nations or the European
Union are being undermined by narrowing national interests around the world.
Institutions have done themselves no favours by becoming elitist, unwieldy, costly and unresponsive to the
needs of their constituents. They are, without exception, in need of reform.
Their inability to enforce fair rules, address imbalances or deflect blame for social/economic grievances,
including an uninterrupted increase in income inequality, has helped reshape the international political
landscape and given rise to a crude appeal by inward looking nationalist movements.
Nationalists have exploited discontent linked to the loss of jobs – typically unskilled and low value added –
to the emerging economies, and to China in particular.
In parts of the United States, for example, there are communities that yearn for the ‘good old days’ when
coalminers followed in family footsteps down into the pits for 12 hour days. Today the mines are closed,
but the local economy has been rejuvenated and the next generation of mining families are enjoying higher
standards of living, longer life expectancies and more sustainable and rewarding employment opportunities.
The notion that industries that moved to low cost countries can be brought back on reasonable economic
terms or that labour markets might be better off with their low skilled jobs is absurd.
The adjustment to globalization hasn't been easy and the benefits among nations haven't been evenly
spread but it is wrong to see it from the narrow perspective of win/lose or an imbalance in traded goods.
Globalization has contributed hugely to economic prosperity, brought hundreds of million out of poverty
in the developing world and advanced a new middle class of consumers that feast on McDonald’s meals,
provides ad clicks for Facebook, spend generously at Disneyland resorts and subscribe annually to Netflix.
Globalization is the reason why the best Asian tech minds work in Silicon valley, why US tech investors are
rewarded with extraordinary profits, why some of the best Vietnamese food can be found in Manhattan
and why white-collar workers in Pennsylvania can afford sophisticated smart phones.
Apple, the first trillion dollar company, relies on an international network of manufacturing plants and
distribution outlets, and fifty business class seats booked to Shanghai every day. Globalization has facilitated
the company’s growth and allowed it to invest billions and create thousands of jobs back in the US.
A key challenge is that globalization has delivered financial rewards disproportionately to the owners of
capital and contributed to widening income inequality that domestic fiscal policy has failed to address.
It is why promises by Bernie Sanders and his millennial colleagues in Congress for the redistribution of
wealth have resonated with many Democratic voters and why the Presidential election is in play.
To paraphrase Winston Churchill, globalization is the worst economic system except for all those others
that have been tried from time to time. It needs a reboot but the alternative is not an option.

Paradox of Plenty

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