Don’t Ignore Leaping Lions!


Disease, war, corruption, and famine are the first images that come to mind when most people think of Africa. Beneath this veneer of negativity, however, lies a very different and positive story. Entrepreneurship is thriving, governance is improving, hunger is dissipating, and economic growth is accelerating.  The continent is young and its population is booming.

I have been visiting Africa with some regularity since 2004. On virtually every trip, the sheer size of the continent catches my attention. It is huge! Think about the fact that Cape Town is approximately 13,000km from Casablanca, almost 3x the distance between New York City and Los Angeles.

Few of us acknowledge or can comprehend the size of the continent, and the visual distortions found on two-dimensional maps don’t help (click HERE). Correcting for these distortions results in a stunning revelation: Africa’s physical footprint on the planet is as large as the United States, India, China, Western Europe, Eastern Europe, and Japan – COMBINED! (Click HERE). Not surprisingly, the continent’s population density is quite low…but this is changing.




According to the United Nations Population Division (click HERE), Africa’s population is expected to quadruple between 2010 and 2100, when the continent is expected to have more than 4 billion people. Nigeria, already Africa’s most populous country, is expected to approach 1 billion people – in a geographic area that is equivalent in size to Texas!

So what? Rapidly rising populations generate a demographic dividend as the labor pool expands more rapidly than the old and young who are dependent on the workers and government. As dependency declines and fewer resources are allocated towards caring for others, economic growth accelerates. Today, 44% of the African population is dependent upon the 56% that is working. By the year 2100, 35% of the (much larger) population will be dependent upon the 65% that are working (click HERE).

Given this outlook, it’s not surprising that Ashish Thakkar, Africa’s youngest billionaire and a successful African entrepreneur, has noted “The Indian tiger and the Chinese dragon have had their day; now is the time for the African lion.” While it may be time for the lion to rise, not everyone agrees. Professor Dani Rodrik suggests Africa’s outlook is weak and prospects for structural reforms and industrialization are poor (click HERE).

Regardless of what transpires economically, one thing remains certain: Africa’s thundering population boom should not be ignored.  The impact of a leaping lion on the demand for food, fuel, commodities, healthcare, education, travel, and other consumer products and services is likely to be felt far and wide.

Sheep pulling Lobsters from Snow?


Earlier this week, I took a trip to Southern Maine. The sheer volume of snow has brought most of the region’s activities to a halt – except one. A visit to Perkins Cove (a traditional summer destination for tourists and Lobster aficionados) revealed many lobster boats had been cleared of snow and were obviously active.  I noticed several lobstermen heading out to check their traps on Monday morning...The lobster business seems to be thriving.


Perkins Cove, Ogunquit, ME. February 2015. Picture by Vikram Mansharamani


This was odd. In prior years, few if any lobstermen would be active in February…given the post New Year’s plunge in demand for lobsters.   Was there any reason to think this dynamic was related to my global protein demand thesis? (See my “King Morocco” piece HERE). I simply had to investigate.

What I found was fascinating. According to the Associated Press, Maine is the de facto center of America’s lobster industry and accounts for more than 80% of production. In the 1800s, lobsters were so plentiful that they were routinely fed to prisoners and servants, some of whom demanded it not be served to them more than twice a week (click HERE for more history). Today, the industry exports more than several hundred million dollars worth of lobster each year and has been growing steadily for years. Perhaps the single biggest driver of growth in demand for lobsters?  China.

So what? China has gone from a 0.6% share of US exports in 2009 to almost 12% in 2014. While such a share grab would be impressive in a static market, it’s more impressive in a fast growing one. During the same five-year timeframe, exports of lobster to China grew from ~$2 million to more than $90 million (click HERE). As per capita GDP has risen, protein appetite (pardon the pun!) has boomed.

The Year of the Sheep (or Goat? Or Ram? Click HERE for a “clarification”) celebrations are accelerating a seemingly insatiable demand for lobsters as a burgeoning middle class seeks to enjoy the auspiciously red crustacean delicacy. Many also believe lobsters are an aphrodisiac (as an efficient low-fat source of protein, it naturally boosts dopamine and norepinephrine and heightens sensitivity), a belief that drives strong demand from young couples as well as a more well-to-do, older crowd.

It’s fortuitous that female lobsters often carry tens of thousands of eggs (click HERE) and that males have remarkable endurance (one apparently traveled 273 miles – click HERE), because their reproduction-inspiring qualities may ultimately necessitate more lobster reproduction as the incessant quest for protein continues!

Déjà Vu: Mansharamani Musings 02-15-2015


This morning, like each of the past four Sundays, I awoke to reports of an impending blizzard.  Same story: a massive storm was going to leave Boston with lots of snow.  In the past three weeks, the greater Boston area has received more than 7 feet of snow!  Given I teach on Mondays in New Haven, it's made for a treacherous start to every week...and has reminded me of the movie Groundhog Day, in which Bill Murray is stuck in a never-ending repetition of the same events every day.   Fortunately for me, however, I've had a streak of wonderful guests visiting my class at Yale.

The first guest to visit my class this year was David Swensen, Yale's Chief Investment Officer and a good friend, who spoke about incentive structures, principal-agent problems, and the need for a fiduciary standard in finance.  Matt Winkler, founding Editor-in-Chief of Bloomberg News, also visited and joined a class debate on the tradeoffs between accuracy and speed in journalism.  The third guest to visit was Steven Fox, Chief Executive Officer of Veracity Worldwide, a strategic risk advisory firm.  Steven joined a classroom discussion about the Foreign Corrupt Practices Act (FCPA), transparency, corruption, and the risks of doing business in the emerging and frontier markets.  My fourth guest was Alex Epstein, author of The Moral Case for Fossil Fuels.  In an engaging and spirited discussion, Alex shared his views about energy markets, climate change, and the role fossil fuels have played in human development.

Although my class provides much-appreciated variety, I find today's headlines more like Groundhog day than the intellectual dynamism of campus life: Greece bailouts, Russian aggressiveness, China slowing, concerns over ISIS, strong dollar complications, etc.  While it's easy to numb to the monotony of these headlines, important developments are brewing below these headlines that affect our geopolitical and economic future.

Consider the repetition of snow-related news.  Remember how last year's tough winter adversely affected the US economy as snowstorms kept consumers (and their money) at home, leaving malls and stores less full than they otherwise may have been?  Are we in for some weather-related "surprises" in which corporate earnings and economic growth disappoint?  One noticeable exception is the industrious fellow who plows my driveway, who seems to be smiling a lot these days!

I'll continue to comment on developments I find intriguing.  In addition to posting my thoughts on my website every Wednesday, I have also begun posting them to LinkedIn, Facebook, and Twitter.  Listed below are links to my most recent comments.  As always, I'd welcome feedback!



The Fertilizer Effect

My latest comment was about the link between carbon dioxide and plant growth.  Higher carbon levels increase plant growth in much the same way that fertilizers do.  Are we overestimating the impact that rising carbon emissions may have on food production and global food security?  Is it possible carbon dioxide can help fight global hunger?  Read more HERE.


PBS: Random Admissions

The PBS Newshour heard about my first class of the semester this year and asked me to share the experience with its audience.  What emerged was a piece that generated interesting debates on how to make tough choices.  Click HERE for the article.  I'd encourage you to scroll past the article to read the comments as well.


Geared Gambling with ETBs

The explosion of ETFs has been accompanied by the creation of leveraged and inverse products, funds that track multiples (positive or negative) of the daily move of an index.  I suggest these vehicles are better suited to speculation and gambling than they are to investing, and further suggest we call them what they are -- exchange traded bets.  Click HERE to read more.


Obama in India...

In mid January, YaleGlobal asked me to reflect on US-India policies in anticipation of President Obama's visit to India.  Although I touch on a host of issues, one idea within this article generated significant feedback: the suggestion that it's time for America to encourage Pakistan-India trade.  Read the piece HERE.


The Energy Subsidy Bubble

Many countries continue to subsidize energy prices via consumption subsidies.  In this piece, I argue that the current low energy price environment offers a unique opportunity to remove these policies without the risk of social unrest.  Click HERE for my comment.


To Get Efficient is Glorious!

Early indications suggest that India may be turning towards capitalism and away from its socialist-leaning past.  In this comment, I reflect on the potential for India to become the fastest growing large economy in the just needs to get out of its own way.  Click HERE for more.


CNBC Interview

In January, I participated in the 2015 India Investment Conference sponsored by the Indian Association of Investment Professionals and the CFA Institute.  I spoke with CNBC immediately after my talk and shared my views of the global economy, India, China, commodities, gold, oil, and central bank induced currency volatility.  Click HERE to watch the ~13 minute interview.


15 Predictions...

My first comment of the year was a look forward to developments that I believe have a reasonable chance of happening in the next five years.  I touch on India's rise, Australia's forthcoming recession, and the rise of robots, among other possibilities.  My objective was not to be 100% accurate, but rather to provoke thought.  I'd love feedback!  To read all 15 predictions, click HERE.

The Fertilizer Effect & Food Security


One of the first things I learned about plants in grade school is that they consume carbon dioxide and produce oxygen, making them great partners for we humans who consume oxygen and produce carbon dioxide. I remember being struck by the simple symbiotic elegance of this balanced relationship. Carbon dioxide and oxygen, I learned, were both essential to life.

The discussion I hear today about carbon dioxide centers almost entirely upon its negative impact, and perhaps due to my interest in food dynamics, I specifically focus on the almost universally accepted claim that carbon-induced climate change will adversely affect global food security.  But given carbon dioxide is an essential ingredient for plant life, wouldn't higher C02 levels generate stronger crop growth?  Might this at least mitigate, if not reverse, the yield drag expected from carbon emissions?

Hundreds of studies over the past 200+ years have demonstrated that higher levels of carbon dioxide are associated with faster, more robust plant growth (click HERE for a summary of what is often referred to as the “Fertilizer Effect”).  The Plant Growth database organized by Craig Idso at the Center for the Study of Carbon Dioxide and Global Change suggests that increasing carbon dioxide by an additional 300 parts per million improves tree growth by 70%+, vegetable yields by 45%+, and grain yields by 35%+. Bjorn Lomborg, director of the Copenhagen Consensus Center, further notes that the fertilizer effect is actually enhanced at higher temperatures, suggesting that rising temperatures may in fact further improve yields.

So what?  The fact that rising carbon dioxide levels may promote plant growth is rarely considered in discussions of climate change and global food security.  It should be.  Alex Epstein, author of The Moral Case for Fossil Fuels, suggests that the fertilizer effect is an “inconvenient fact” that merits serious consideration, particularly when thinking about one’s carbon footprint. What if less carbon meant less food?  Does anyone think driving their Prius may be hurting the hungry?

The effectively uncontested popular agreement that carbon emission will only hurt agriculture necessitates that we follow legendary former General Motors CEO Alfred P. Sloan’s suggestion for combating consensus: “If we are all in agreement…then I propose we postpone further discussion of this matter…to give ourselves time to develop disagreement and perhaps gain some understanding….”



Random Admissions at Yale


Last month, I greeted a Yale classroom overflowing with students interested in taking an undergraduate business ethics class I was teaching this semester. I’d targeted 20 students for the seminar, but more than 140 students expressed interest via email or the pre-registration process and by showing up for the first class.

I walked into the room with a list of 10 students that I had accepted, as per Yale’s guidelines for programs sponsoring a course. Seven showed up -- six females, one male. I wrote their names on the board in what would become a real-time list of the class roster. Thirteen slots left, for the other 50-some-odd students in the room.

Since this was a business ethics course, I thought we might start it by modeling transparency and fairness. So I told the students to guide the selection process themselves. Disappointed students would then consider the outcome legitimate, I figured; all would engage in ethical decision-making. “This may just seem like logistics,” I said, “but it’s the essence of ethics – making tough choices. First lesson – selecting the accepted students.”


At that point, the one accepted male student got up, put on his coat, and started to walk out. Yale’s “shopping period” allows students to change selections until a week after classes begin, so I wished the student well.

“But I have my seat…my name is on the board.” I asked if he would be shopping for another class. “Nope, getting breakfast. Don’t need to waste my time here.”

But this was an ethics lesson; classroom participation and group process would be part of the grade. My reaction was simple: I erased his name. Why bother wasting any more of his time? His fellow students’? Mine?

Yes, I was a disgruntled instructor, annoyed by an entitled student. But wasn’t this true to the power of process? How would his peers who stayed feel?

They, it turns out, were mainly concerned with constructing arguments to justify their selection.

“The class should have a diversity of majors, as it’s important to get unique perspectives,” noted an art major.

“I think it’s critical that seniors get priority as they will not have another opportunity to take the course,” said a senior.

An Australian student then reminded the class, “We all live in an increasingly interconnected world and as such, the class really should have some foreign students.”

One student who had tried to get into the class last year suggested “those who have tried in prior years should be given preference.”

And with an argument that we may hear more frequently as women pass men in college attendance, a male student, noting no seats had been given to males so far, added, “We should not discriminate against either gender.”

All were valid arguments, justifiable as legitimate criteria – and each could be used to fill the remaining seats. How could one choose between them? I let the class take the lead.

Everyone agreed that seniors in the sponsoring majors deserved the 10 seats originally allocated. We were now down to six, so the remaining four seats were assigned randomly among the 15 eligible (because of their major) seniors. Ten down, 10 to go.

Given that only two of the students accepted so far were male, the class now agreed that gender and seniority mattered. Meanwhile, the previously-admitted student who had been un-admitted politely raised his hand and asked, apologetically, if he might be eligible for consideration in the selection process for senior males.

I suggested it would be fine, but before we commenced further selection, I turned to the class. After some discussion, the class collectively felt that he had suffered his penalty. He was allowed to join the pool. “After all,” noted one student, “if a similar person entered the class right now, we’d let them put their name in the hat.”

Two names were randomly chosen from the seven senior men in the room. Diversity of major was the next criterion, and the class allocated five seats to the 23 students who were studying biology, film, history, art, environmental studies, architecture, etc.

While most of the students in the room had at least one chance of being drawn, there was rising discomfort with the process. So with five minutes remaining in the class, I asked the students to finish the process by selecting the remaining three seats and left the room.

Outside, I could hear loud debate. I went to the restroom, and upon returning, found the students had ultimately decided on truly random selection and put all the remaining names into a hat and drawn for the three spots left.


Unfortunately or not, depending on your rooting interest, Mr. admitted/unadmitted didn’t make the cut. But as far as I can tell, everyone else (and perhaps he too) felt fairly treated, despite the fact that many went away disappointed. And while random allocation seems, well, random, it may be the most legitimate method when facing indistinguishably worthy selection criteria…just as the students themselves concluded.

Ultimately, all seemed to understand that business ethics, like economics more generally, is a world of tradeoffs and ambiguities, most fairly dealt with when made transparent.

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