— VietEcon

A few items

I’m a bit busy today, so a few things that struck my eye today.

1) Law firms, litigation and Vietnamese businesses: I am not sure if I am surprised by this, but it does seem a bit weird: The most fashion forward US law firm (Boies Schiller) is joining what appears to be the most aggressive Australian law funder to “help” Vietnamese businesses sue. Basically, they are going to put up $30m in order to fund litigation for small Vietnamese firms that have potential cases. That would presumably include the lawyer’s time but mostly its for the other expenses that need to be paid (expert witnesses’ testimony, etc.). These expenses can be really high.

Some of this will probably be great. Let’s help the poor small Vietnamese businesses! Let’s make these fights fairer! These little guys are getting kicked around by these big firms! Now those baddies are gonna have to face a 10-ton legal gorilla. And for the Australian readers: “That’s not a knife. This is a knife.” [Yes, I know you probably hate that, but I can’t help myself.]

And some of this will be horrible. Some small Vietnamese company will have a too-vaguely worded patent that then Boies Schiller uses to sue a big firm that pays. Most of the fees go to the lawyers/funders, the world is worse off.

I am not so excited about exporting the US legal system abroad. It doesn’t seem the best thing about America. And I didn’t know that Australian law was similar. Learn something every day.

I asked a lawyer friend about it, and this is what he said:

Litigation funding is becoming much more normal - I’ve thought about it in some cases but haven’t used it before. I know some folks here [at his firm] who have. The thing that’s a little odd here is that Boies Schiller is out in front advertising this with the litigation funder. I haven’t seen that before.

As I said, fashion forward.

2) More meth: Looks like Vietnam is having its own Breaking Bad. On March 21, 2019 (scroll down to read the post), I wrote about a police seizure of 300kg of meth. Well, looks like that didn’t do much to deter future criminals. There was a 600kg meth seizure on Monday (April 15, 2019) in Central Vietnam. According to the article,

Opium and heroin are the drugs of choice among older users, but youngsters are increasingly turning to party drugs such as ecstasy, meth and ketamine which have flooded the market…Last year seven young people died of suspected overdoses at an electronic music festival in Hanoi.

The laws are already strict, so not sure what the solution is. I generally don’t think laws work that well in deterring drug use. Culture is much better at preventing young people from becoming addicts. Also, I have a hypothesis that legalizing the less addictive drugs, like marijuana, may actually lead to less hard drug use. But the proof isn’t really there. Here’s a study that marijuana use actually decreases injection drug use (in this case heroin, crack, meth and cocaine). One reason for this is that as marijuana becomes legal, people don’t interact with dealers of hard drugs. So if you don’t have access to a dealer with a wide range of drugs, then you won’t go seek them out.

Not to harp on marijuana legalization, there is a second theory that marijuana decriminalization decreases alcohol use. This 2016 survey review seems not to bear that out, because there is also evidence for the competing theory that marijuana is complementary with alcohol use. Here’s a more positive study about how marijuana decreases alcohol use.

So what am I saying? Not really sure. Just that meth ain’t good. And Vietnam may need to look to alternative ways to combat its spread.

3) Vietnam continues to build its Navy. According to Prashanth Parameswaran, the Vietnamese navy has become one of the more capable navies among Southeast Asian states. All of Asia is fearful of a rising Chinese, and a key flash point is the South China Sea. Vietnam already cancelled a contract to drill there because of Chinese pressure. It seems to be building up its Navy as a showy response to this encroachment.

But ultimately, China is going to do what China’s going to do. And Vietnam will just have to take it. The more economic, diplomatic and military resources that Vietnam has should give it a better negotiating position. But it needs to make sure that it doesn’t cuase China to overreact. Weaving that road will be hard.

The US could help, but my view is that the US missed its best chance to build a big block that could counteract China in Asia: the TPP (Trans-Pacific Partnership). It should go back and join it. And it should work harder to build up relations with and among all of the other Asian nations. Vietnam is key to that, and is already predisposed to the US. Trump’s summit with Kim (which I think was kind of stupid), was helpful for improving ties.

A stronger response to China probably is good for both the US and Vietnam, but ultimately the key is to avoid Thucydides’ trap: “when a rising power threatens to displace a ruling one, violence is the likeliest result.”