Can labour save Boeing from itself? The global infrastructure finance boom, the economic history of the holiday resort & the economics of a Strep vaccine
Great links, images and reading from Chartbook Newsletter by Adam Tooze
Chen Wen Hsi, Returning from the market 1960s Source: Singapore National Gallery
Thank you for reading Chartbook Newsletter.
Can its workers save Boeing from itself
Boeing’s largest labour union is seeking a board seat at the plane maker, saying “we have to save this company from itself” as quality control concerns draw scrutiny from customers, passengers and regulators. The International Association of Machinists District 751, which represents 32,000 workers at factories in the US state of Washington, began contract negotiations with Boeing this month. One of its aims is to have a greater voice at the company, district president Jon Holden said in an interview. Adding a union representative would bring “a grounding and a balancing” to the 13-person board, he said. “We are motivated to ensure our members have a say,” he said. “We’ll be proposing that we have a seat on the board of directors. We believe that we have a unique ability to understand the production system . . . With what’s going on these days, we are oftentimes the last line of defence, and we have to save this company from itself.”
Source: FT
Your interest is much appreciated.
The global infrastructure finance boom
“Infrastructure investment came to the US in the early 2000s and it was dominated by a handful of people who were mostly project finance, utilities and municipal bankers,” says one senior industry executive. “They saw it as a trend and capitalised by making big early bets around the crisis. Many of the people who didn’t get washed out became billionaires.” Today’s infrastructure market is more crowded. The success of entities such as Stonepeak and GIP, along with a decade of rock-bottom borrowing costs, prompted asset managers like BlackRock, CVC and General Atlantic to enter the fray by acquiring large infrastructure managers. A further wave of deals is brewing, according to bankers and private equity executives. Once an investment backwater, infrastructure became a favoured area for pension funds looking for yield and protection against market volatility. Infrastructure assets under management worldwide have soared beyond $1tn, more than six times their level in 2008, according to data provider Preqin.
Source: FT
What keeps the project going are subscriptions from readers like you. To join the subscribers club and support the flow of great content, click here and choose one of three options.
Apple is “balancing” in China
For subscribers only
The economic history of the holiday resort
Here are the notes from the resort hotels segment:
When did resort hotels get their start?
How does the business model of resort hotels work?
What effect do they have on the communities they are located in?
Those are a few of the questions that came up in my conversation with Cameron Abadi on our FP podcast Ones and Tooze. You can listen and read more here.
India - the immobile giant
For subscribers only
Pakistan eager to tap the market for Panda bonds
For subscribers only
Chen Wen Hsi The mountain is green 1960s
Source: Singapore National Gallery
The rates of return on a Streptococcus vaccine are bonkers
Group A Streptococcus (Strep A) is one of the deadliest pathogens in the world, leading to more than 600,000 deaths per year. Moreover, even in countries where antibiotic treatment is readily available, Strep A has a considerable disease burden contributing more than 600 million cases of pharyngitis per year along with substantial morbidity from cellulitis, invasive disease, and skin infections. Since the U.S. Food and Drug Administration lifted the ban on human subject testing of Strep A vaccines in 2004, Strep A has become a promising target for vaccine development. However, the question of how much research and development (R&D) funding should be allocated to produce such a vaccine remains unanswered. … We develop a model of optimal spending, from a global societal perspective, on research and development (R&D) for vaccines and treatments. The model takes as inputs total harm from the disease, the probability an R&D project succeeds, the cost of a project, and the fraction of total harm a success alleviates. Based on these inputs the model outputs an optimal amount of spending and a rate of return. We calibrate the model for Strep A. Optimal spending is estimated to be 2020 USD33 billion. This spending leads to 2020 USD1.63 trillion in benefits and a real return of 22.3% per year for thirty years. Sensitivity shows an optimal spending range of 15.9 billion to 58.5 billion, a benefits range of 1.6 trillion to 37.9 trillion, and a return range of 18.0–48.2%. Investment in a Strep A vaccine could create enormous benefits for comparatively little cost. It represents one of the highest return uses of public spending. Policy can promote Strep A vaccine development through direct funding of projects and by promoting financial mechanisms that allow the private sector to diversify its R&D investment. For many reasons, private sector investment in Strep A research and development is unlikely to reach our optimal amounts. First, some research and development, e.g., basic research, is hard to patent and therefore is unlikely to provide an adequate return on investment for private capital. Second, the high required rate of return of pharmaceutical companies due, in part, to their ability to sell products with patent-protected monopolies, will often discourage investment in all but the most promising projects. Third, the probability of success of an individual project is small, resulting in insufficiently high returns to justify the R&D risk. In contrast, a large portfolio of many projects greatly reduces the risk of not developing a viable product. Public sector policy can move investment toward the optimal amount. A simple way to do this is to directly fund vaccine R&D projects. On a large scale, this mechanism of funding greatly reduces the risk of vaccine R&D by spreading risk across many possible projects. To raise funds for such an investment, governments have several approaches at their disposal: increasing taxes, crowding out other government spending, and debt finance. Debt finance is particularly appealing as it allows the government to better align the costs and benefits of vaccine development. Any vaccine R&D project is likely to see benefits many years into the future. Debt allows a government to borrow money and pay back the principal in the future after R&D benefits materialize. Moreover, advanced economies can currently borrow at real interest rates substantially lower than our calculated returns on investment. An alternative to direct funding would be for the government to encourage a large investment fund that would invest in a bond to raise capital for private sector investment into vaccine R&D. Many private investors pooling resources would fund many vaccine R&D projects at the same time. Profits from successful projects would then provide a return to the bond holders. The government could encourage the development of such a private fund with a guarantee on the principal investment. Such an approach would reduce the risk of vaccine development while providing a role for both the public and private sector in vaccine R&D.
Optimal global spending for group A Streptococcus vaccine research and development, Tortorice, FerrannaBloom npj Vaccines volume 8, Article number: 62 (2023)
Chen Wen Hsi Swans 1987
Source: Singapore National Gallery
The most expensive election in the world is not the US election
For subscribers only.
Lorenz von Stein (1815-1890) on Debt
"A state without public debt is either doing too little for the future or demanding too much from the present.” Lorenz von Stein
Chen Wen Hsi Serenity
Source: Singapore National Gallery
If you have scrolled this far, you know you want to click