Weekend reading links

1. How is global trade changing due to Trump tariffs?

US tariff revenue surged almost fourfold from a year earlier to a record $24.2bn in May, while imports from China fell 43 per cent from the same month in 2024... China's exports are up 4.8% on last year despite a sharp drop in trade with the US.

There's also emerging evidence that Chinese firms are rerouting exports to the US through South East Asia and EU countries to avoid the high tariffs on Chinese exports.

The value of Chinese exports to the US dropped 43 per cent year on year in May, according to figures published by the US census bureau — equivalent to $15bn-worth of goods. But the country’s overall exports rose 4.8 per cent in the same period, official Chinese data showed, as the shortfall in trade with the US was offset by a 15 per cent increase in shipping to the Association of Southeast Asian Nations trade bloc and a 12 per cent rise to the EU... 

Separate research by Capital Economics estimated that $3.4bn of Chinese exports were rerouted through Vietnam in May, a rise of 30 per cent compared with the same month last year. Indirect trade through Indonesia also increased markedly, with an estimated $0.8bn rerouted in May 2025, 25 per cent higher than May 2024. Exports of electronic components such as printed circuits, parts of telephone sets and flat panel display modules to Vietnam were up 54 per cent, or $2.6bn, in May 2025 compared with a year earlier, Chinese data shows... Indian exports to the US jumped 17 per cent in May compared with a year earlier, while imports from China and Hong Kong rose 22.4 per cent according to Ajay Srivastava, founder of the Global Trade Research Initiative, a research group.

This is a good graphic on what products have been squeezed following the tariffs. 

2. The US equity markets are going about their merry ways overlooking the real costs that are introduced by the Trump tariffs. 

Despite the carve-outs and climbdowns, the US’s overall average effective tariff rate now stands at 15.8 per cent, according to calculations by the Yale Budget Lab — the highest rate since 1936 and an increase of more than 13 percentage points since Trump returned to office in January.

A big cause of concern is the uncertainty associated with Trump policies that are taking its toll on investments.

The most tangible consequence of the Trump tariffs so far is not supply chain reordering, but the sudden dearth of dealmaking, according to Persson of EY. A survey of dealmakers by PwC in May found that 30 per cent were either pausing or revising deals because of the uncertainty caused by tariffs. Among those pushed back amid the uncertainty included bids for Boeing’s navigation unit and an expected £4bn sale by buyout group Apax of insurance group PIB. The sudden slowdown flew in the face of investor expectations that Trump’s return to the White House would trigger a wave of M&A activity on the back of a deregulatory splurge, according to Josh Smigel, partner in PwC’s deals practice. As a result, Smigel calculates, private equity firms are holding about $1tn worth of assets that — absent the Trump uncertainty — could have been redeployed back into the market if planned exits had not stalled.

3. Has Israel won the battle, but only to lose the war?

Mr. Netanyahu’s relentless and unapologetic military response to the Oct. 7, 2023, Hamas-led attack that killed 1,200 people and took 250 people hostage has cemented the view of Israel as a pariah, its leadership accused of genocide and war crimes, and disdained by some world leaders. In opinion polls globally, most people have a negative view of Israel. In Gaza, the war against Hamas has taken a devastating toll, killing tens of thousands of people and leaving more than a million homeless and hungry. Much of the enclave has been reduced to rubble. Poverty and hopelessness are rampant... Israel’s actions have shattered a rock-solid, bipartisan consensus in the United States for defending Israel. Now, support for the country has become a fiercely contentious issue in Congress, the subject of angry debates and protests on college campuses and fuel for a surge in antisemitic incidents in the United States and around the world... Israel has created a new wave of global opinion critical of its goals and methods. And many Israelis now feel threatened while abroad, even as they are more secure at home... 

In a Pew Research survey of 24 countries around the world published last month, negative opinions about Israel have surged. In 20 countries, more than half of the people said they had an unfavorable view of Israel. In eight countries — Australia, Greece, Indonesia, Japan, the Netherlands, Spain, Sweden and Turkey — more than 75 percent held that view... Just 46 percent of Americans in the latest Gallup survey expressed support for Israel, the lowest number since the company began asking the question a quarter-century ago. A third of the respondents in the United States said they sympathized with the plight of the Palestinians, up from just 13 percent in 2003... Inside Israel, the decision to prioritize military victories over the return of the hostages has deeply wounded many people. And the violence has strained the good will of the country’s allies and neighbors.

4. Thrive Capital, founded by Josh Kushner, the brother of Jared Kushner is charting a new model of VC investing.

The approach Kushner has developed since launching Thrive 14 years ago: get close to founders, remain loyal through crises and concentrate funds in a small number of companies. Betting a billion dollars or more on a behemoth inverts the classic venture model: firms typically write dozens of small cheques in young start-ups; most fail, but the flops are more than offset by a few spectacular successes... venture capital has mutated from a cottage industry into an institutionalised asset class... The shift has left VCs with a choice: remain faithful to early-stage investing and hope for outsize returns, or scale up funds to meet increasingly massive private companies. Thrive is attempting to manage both, writing cheques for multibillion-dollar start-ups its team believe can still multiply 10 or 100-fold in value... Most VCs split funds between dozens of start-ups, but the vast majority of a Thrive fund will go to just 10-15. The firm has put 10 per cent or more of earlier funds to work in single companies, including workplace messaging app Slack, GitHub, Instagram and Stripe. Thrive first invested in Stripe, then valued at $3bn, in 2014, and has increased its stake multiple times, including investing close to $2bn last year... the firm has quietly shown intense fealty to founders during moments of crisis, such as during the boardroom coup that briefly ousted OpenAI’s Altman last year. Kushner was instrumental in returning Altman to the company after less than a week... 

Thrive’s rivals, including more established West Coast firms, dismiss the approach as closer to asset management. “We invest in companies, they trade in stocks. It’s like an ETF [exchange traded fund] for venture,” says a partner at one Silicon Valley firm. “But private companies are not stocks. You can’t get out when they start going down.” Speaking privately to the FT, some institutional investors question whether Thrive’s massive bets can ever deliver “venture-style returns”. Others say it is too soon to judge a group whose biggest investments have not yet cashed out. Thrive’s biggest portfolio companies, including OpenAI and payments start-up Stripe, have racked up massive paper gains. But until they go public or are acquired, profits won’t be returned to institutional investors in Thrive’s funds... The payout for Thrive and its backers would be enormous should Stripe, OpenAI, or defence tech company Anduril go public... Thrive has raised a total of $12.3bn, and now has almost $25bn under management, making it one of the largest VCs in the country.

Interesting that Mukesh Ambani has a 3.3% stake in Thrive capital as part of a consortium of investors! 

5. This is a very good graphic that shows how VCs are experiencing a squeeze in their cash flows.

Much the same could be said about PE funds.

6. Private equity in data centres.

The private equity giant Blackstone spent $10 billion in 2021 to acquire QTS, and has been pouring billions more into the company to help it expand its data centers... This largely unglamorous industry is critical for A.I. leaders to get right. QTS leases its facilities to companies like Amazon and Meta and supplies the electricity and water needed to power and cool their computers... Blackstone calls data centers one of its “highest conviction investments.” Blackstone is already one of the world’s largest owners of office buildings, warehouses and science labs, but it has sunk more money into data centers and related infrastructure than into almost any other sector in the firm’s 40-year history. All told, Blackstone has put more than $100 billion into buying and lending to data centers, as well investing in construction firms, natural gas power plants and the machinery needed to build them... (it) says it still sees strong demand from tech companies, which are willing to sign what they describe as airtight leases for 15 to 20 years to rent out data center space... 

Blackstone is not alone. Data centers are drawing a crowd on Wall Street — investment giants like KKR, BlackRock and Blue Owl have collectively plowed hundreds of billions into the industry. As investment firms announce larger and larger deals, one Wall Street executive says he jokes about “Braggawatt” deals, as data centers are typically measured by the wattage they use. The spending frenzy has created concerns about whether too many data centers are being built... The complexity and cost of running A.I.-focused data centers stem from the vast amounts of power they guzzle, which can be about 10 to 20 times as much per server or rack as general cloud computing. There is also the need to keep the centers operational 99.999 percent of the day, or the “five nines” in industry parlance. That equates to about five minutes of downtime all year for maintenance or to switch out servers.

7. China's dominance of clean energy technologies

China has also begun to dominate nuclear power, a highly technical field once indisputably led by the United States. China not only has 31 reactors under construction, nearly as many as the rest of the world combined, but has announced advances in next-generation nuclear technologies and also in fusion, the long-promised source of all-but-limitless clean energy that has bedeviled science for years.

And, buoyed by President Trump's policies, America retains leadership of fossil fuels.

This reversal is striking.

Americans created the first practical silicon photovoltaic cells in the 1950s and the first rechargeable lithium-metal batteries in the 1970s. The world’s first wind farm was built in New Hampshire nearly 50 years ago. Jimmy Carter installed solar panels on the White House in 1979... In 2008 the United States produced nearly half of the world’s polysilicon, a crucial material for solar panels. Today, China produces more than 90 percent.

This is a good description of China's manufacturing prowess.

Last June, the Urumqi solar farm, the largest in the world, came online in the Xinjiang Autonomous Region in China. It is capable of generating more power than some small countries need to run their entire economies. It’s hardly an anomaly. The other 10 largest solar facilities in the world are also in China, and even bigger ones are planned. The Chinese automaker BYD is currently building not one but two electric vehicle factories that will each produce twice as many cars as the largest car factory in the world, a Volkswagen plant in Germany.

Finally, a graphic that captures China's clean energy investments globally.

Chinese firms are building wind turbines in Brazil and electric vehicles in Indonesia. In northern Kenya, Chinese developers have erected Africa’s biggest wind farm. And across the continent, in countries rich with minerals needed for clean energy technologies, such as Zambia, Chinese financing for all sorts of projects has left some governments deeply in debt to Chinese banks. Since 2023, Chinese companies have announced $168 billion in foreign investments in clean energy manufacturing, generation and transmission, according to Climate Energy Finance, a research group.

8. Tim Harford points to a new paper by David Autor and Neil Thompson who use an "expertise" framework to explain the impact of automation and AI on jobs. Autor and Thompson pose a question

Would we expect accounting clerks and inventory clerks to be similarly affected by automation? There are several well-established approaches to analysing this question, and all of them suggest that the answer is “yes”. Back in the day, both types of clerk spent a lot of time performing routine intellectual tasks such as spotting discrepancies, compiling inventories or tables of data, and doing simple arithmetic on a large scale. All of these tasks were the kind of things that computers could do, and as computers became cheap enough they took over. Given the same tasks faced the same sort of automation, it seems logical that both jobs would change in similar ways. 

But that is not what happened. In particular, say Autor and Thompson, wages for accounting clerks rose, while wages for inventory clerks fell. This is because most jobs are not random collections of unrelated tasks. They are bundles of tasks that are most efficiently done by the same person for a variety of unmysterious reasons. Remove some tasks from the bundle and the rest of the job changes. Inventory clerks lost the bit of the job requiring most education and training (the arithmetic) and became more like shelf-stackers. Accounting clerks also lost the arithmetic, but what remained required judgment, analysis and sophisticated problem solving. Although the same kind of tasks had been automated away, the effect was to make inventory clerking a job requiring less training and less expertise, while accounting clerks needed to be more expert than before. 

The natural worry for anyone hoping to have a job in five years’ time is what AI might do to that job. And while there are few certainties, Autor and Thompson’s framework does suggest a clarifying question: does AI look like it is going to do the most highly skilled part of your job or the low-skill rump that you’ve not been able to get rid of? The answer to that question may help to predict whether your job is about to get more fun or more annoying — and whether your salary is likely to rise, or fall as your expert work is devalued like the expert work of the Luddites.

9. Two graphics that capture the essence and outcome of One Big Beautiful Bill (OBBA). One, stripped off all its hype, OBBA is a giant tax cut bill.

And its biggest beneficiaries will be the richest.

Analysis by scholars at the University of Pennsylvania suggests that Americans earning under $18,000 would lose $165 in 2027, or 1.1% of their income. By 2033 their annual losses would rise to $1,300 on average—about 7.4% for the group. The richest 0.1%, earning over $4.45m, would gain more than $300,000 in 2027, a 2.3% increase. Much of this comes indirectly, via changes to corporate taxes, which are usually assumed to benefit wealthier households who own stocks... Analysis of the House version by scholars at the University of Pennsylvania suggests that Americans earning less than $16,999 would lose about $820 a year—a 5.7% reduction in median income for that group. The richest 0.1%, earning more than $4.3m, would gain $390,000, a 2.8% increase.

10. Driverless EV trucks are already operational in a coal mine in Inner Mongolia. (HT: Adam Tooze).

Yimin is one of the five largest open-cast coal mines in China. During peak season, it used to require about 300 trucks, operated by around 1,200 drivers working shifts around the clock, to transport coal to processing sites, and soil, sand and rocks to dumping grounds. But managers said the mine faced a shortage of drivers. Dangerous driving conditions led to high attrition rates, compounded by declining interest among younger generations in pursuing this profession. “Truck drivers face exhausting workloads that often lead to health issues,” said Yimin mine director Shu Yinqiu. The solution came earlier this year with a fleet of 100 photovoltaic-battery-powered, self-driving trucks. They represent the world’s largest deployment of autonomous electric mining trucks, highlighting China’s resolve to upgrade its traditional industries with advanced technologies, as the nation grapples with a shrinking labour force and an ageing population...

Key partners in the project include Huawei Technologies, Xuzhou Construction Machinery Group, State Grid and the Beijing University of Science and Technology. Now, instead of a thousand-man crew, just 24 people, divided into four teams, are needed to operate the 100 new trucks. Staff monitor and control the vehicles from the comfort of a remote control room, where live-feed videos and real-time traffic information are displayed on multiple screens... As of September, the China National Coal Association (CNCA) estimated there were over 1,500 automated mining trucks in China. It predicted that number would triple to 5,000 by the end of this year and exceed 10,000 by 2026... A fleet of 100 unmanned trucks could save coal mine operators 40 million yuan (US$5.6 million) in driver salaries annually, according to CNCA estimates.

11. Major announcement for the establishment of a PCB and Copper Clad Laminate (CCL) manufacturing facility by Syrma SGS Technology at Naidupeta in Andhra Pradesh with an investment of about Rs 1800 Cr and in partnership with South Korean company Shinhyup Electronics Ltd. The project is expected to be commissioned by 2026-27 and can avail incentives under the GoI's Electronics Component Manufacturing Scheme (ECMS). In 2024, the GoI had imposed a 30% anti-dumping duty (ADD) on bare PCBs to boost domestic production. The Indian PCB market was valued at $6.2 bn in 2024 and is estimated to grow by a CAGR of 16.4% from 2025-33. 

12. Spain wants to avoid the costs of being part of NATO, while wanting to access its benefits. It was the only standout against accepting the goal of 5% of GDP defence spending target by NATO members at the recent NATO summit. At the same time, as FT reports, one of its defence firms, Indra, which is 28% owned by the Spanish Government, is benefiting from NATO defence spending. 

In April, the group was given a role in 12 European Defence Fund research and development projects and made the leader of one involving radars. Its executives were in Ukraine last month pitching their wares... In the air, Indra is Spain’s lead participant in Europe’s flagship fighter jet project, the Future Combat Air System, a sometimes prickly partnership with Airbus, which represents Germany, and France’s Dassault Aviation.

13. India's derivatives market, and how Jane Street abused it before SEBI cracked down.

In December 2020 — when Jane Street first set up its Mumbai arm — the monthly turnover of futures and options markets on the National Stock Exchange had reached nearly $300bn, from just $134.7bn four years earlier, and by December 2024 stood at $512.7bn. This became a fertile terrain for Jane Street. Between January 2023 and March 2025 the firm netted an overall profit in India of about $4.3bn, Sebi said in its order on Thursday.

14. Using dupes of expensive brands appears to be a trend in the US, as seen from the ongoing fight between Lululemon which has sued Costco of copying at least six patented clothing designs, including its popular Scuba hoodie and Define jacket.

Once seen as embarrassing parsimony, buying knock-offs has become a fashion statement of its own. Egged on by hashtags, TikTok videos and media articles, customers are leaning into the fun of finding cheaper but still good alternatives, turning the search for dupes into a public treasure hunt. Nearly half of US consumers surveyed by analytics firm First Insight said they had tried a product specifically because it was a “dupe”, and 70 per cent of shoppers who make more than $150,000 said they were more likely to try a dupe than other private label goods...

The warehouse store’s $20 sweatshirt mimics the ornamental stitching and pouch pockets of Lululemon’s Scuba offering, which sells for six times the price. And Costco’s dupe of the Design jacket mimics an unusual line of curved stitching across the back. Lululemon contends in its lawsuit that those specific details violate the “trade dress” patents that it has registered over the past two years, as well as a trademark on the colour description “tidewater teal” that it applied for one day before filing its claim that Costco had “unlawfully traded upon Plaintiffs’ reputation, goodwill and sweat equity”.

Interestingly, US laws allow considerable flexibility in the interpretation of design patents.

US rules protect makers from infringement claims if the similarities are based on function rather than distinctive design. The warehouse group could also try to turn the dupe craze to its advantage by arguing that consumers are unlikely to be misled into believing that they are buying a Lululemon original. Costco’s products are clearly marked with either the Kirkland brand or the manufacturer’s name. Despite the publicity, most patent attorneys expect the dispute to settle, as Deckers’ first Uggs lawsuit did last year. Each side has too much to lose from a trial. Costco could be on the hook for gigantic monetary damages, while “if Lululemon were to lose, it would be open season” for other duplicates, says Josh Gerben, a DC trademark attorney.

15. Good story on how Tamil Nadu's industrial development strategy has brought about broad-based regional development across the state.

16. AI in primary health care.

Shishu Mapan, an artificial intelligence (AI) tool trained on over 30,000 infants, built by scientists at the Wadhwani Institute for AI, a non-profit that develops AI-based solutions for social impact. Using a short, arc-shaped video while the newborn is undressed and laid on a cloth sheet, the app estimates the infant’s weight and growth metrics, which eliminates the need for scales or guesswork... AI-powered tools like Wadhwani AI’s app could become frontline essentials, capable of transforming child health outcomes where the system often falls short. It also eases the burden on frontline health workers, who often struggle to keep up with high demand in rural areas... AI-powered tools like Wadhwani AI’s app could become frontline essentials, capable of transforming child health outcomes where the system often falls short. It also eases the burden on frontline health workers, who often struggle to keep up with high demand in rural areas... AI-powered tools like Wadhwani AI’s app could become frontline essentials, capable of transforming child health outcomes where the system often falls short. It also eases the burden on frontline health workers, who often struggle to keep up with high demand in rural areas.

17. Interesting that even as the overwhelming majority of the world has no confidence in Donald Trump, India stands alongside Israel in having the highest confidence!

Wonder what actions of Trump warrant such confidence?

18. Patent cliffs facing pharma companies.

Keytruda... cancer medicine is one of the world’s best sellers, earning Merck $29.5bn in sales last year... In 2028 Keytruda’s patent ends... Drugs worth about $180bn of revenue a year are going off patent in 2027 and 2028, according to research firm Evaluate Pharma, representing almost 12 per cent of the global market. Bristol Myers Squibb and Pfizer are also facing 2028 patent expirations for top-selling drugs. 

Interesting aspects of the Pharma industry.

While all innovations can be patented, the pharma industry suffers from patent cliffs in ways that others such as the tech industry do not. This is mainly because the key active ingredient in a drug is covered by one main patent, which is hard to invent around, and chemical formulas are relatively easy to copy. Sampat of Johns Hopkins says the median number of patents per drug is around three to five, not the hundreds or thousands that cover, for instance, an iPhone. “So any given patent expiring doesn’t matter all that much for something like the iPhone, as it would for a drug,” he says. Also unlike the iPhone, few patients are loyal to their brands and healthcare systems are eager to cut costs by moving to generic versions quickly after they are released. Many countries have laws allowing pharmacists to automatically swap out branded prescriptions with generics.

19. The problem with the rail ticket subsidy of Indian Railways

This monopoly network transports 13 million people every day and its non-premium services are heavily subsidised. According to the railway minister, the cost of travel per km by train is ₹1.38 but passengers pay only 73 paise, a subsidy of 47 per cent. Though the government dishes out large sums for passenger subsidies, part of the gap is supposed to be covered by freight services and premium air conditioned passenger services. The problem with this cross-subsidy policy is that railway freight services have been steadily losing share to road transport over the decades and its profits are not enough to cover the losses from passenger services. As for AC services, some of which make money in some years, they account for a minuscule 5 per cent of overall passengers. The proliferation of low-cost airlines and growing air connectivity — ironically, this, too, is government policy — is likely to diminish demand for this segment, despite the investment in semi high-speed premium Vande Bharat service.

20. The NPAs on bank loans to MSMEs are at historic lows.

Gross NPAs in the system have touched a new low of 2.3 per cent of loans, with a sharp drop in NPAs in MSMEs. Gross NPAs in MSMEs declined from 6.8 per cent in 2022-23 to 4.5 per cent in 2023-24 and further to 3.6 per cent in 2024-25. NPAs in the MSME sector have historically been of the order of 9 per cent or more... bankers have found innovative ways, such as the Trade Receivables Discounting System (TReDS), to finance MSMEs... The TReDS book was about ₹2.7 trillion, or 10 per cent of the MSME book, in 2023-24. It cannot explain the current NPA level of 3.6 per cent on the entire MSME exposure. The NPA level in the Emergency Credit Line Guarantee Scheme (ECLGS) is 5.6 per cent. Recall that the ECLGS was introduced during the pandemic in May 2020 in order to facilitate additional lending to MSMEs and prevent a secular collapse in the sector on account of a crisis of liquidity. The eligibility conditions were pretty stringent. Only MSMEs that were solvent prior to the onset of pandemic were meant to qualify. The loans granted under ECLGS in the period 2021-23 amounted to ₹3.68 trillion or 12 per cent of loans outstanding to MSMEs in 2024-25. If gross NPAs on the ECLGS loans were 5.6 per cent and NPAs on total MSME loans are 3.6 per cent, that makes the performance on the remaining 88 per cent of MSME loans truly impressive.

21. Finally, a graphic below on the spectacular reduction in the price of green energy sources since 2010.

Weekend reading links

1. Shang Jin-Wei makes some important suggestions on how countries can mitigate the Trump trade shock.

First, they must devise effective retaliation strategies. The European Union’s (EU’s) Anti-Coercion Instrument provides a useful model for applying economic pressure without directly harming domestic industries. For example, these measures could allow the bloc to suspend intellectual-property protections for US software and streaming services or restrict US banks and financial-service providers from operating within EU markets. Developing countries might find such measures especially attractive, because the US tends to run large trade surpluses in intellectual property and financial services.

China’s mineral-export restrictions offer another example... A number of other countries have market power in some key products they export, and might explore a similar approach. Governments must also consider the indirect yet significant impact of interest-rate and exchange-rate fluctuations from Mr Trump’s tariffs. For emerging markets and developing economies, this means keeping short-term foreign debt at sustainable levels. Globally, companies must prepare for the possibility that interest rates will remain elevated for longer than anticipated... Strengthening regional economic integration by removing trade and investment barriers within existing trade blocs would be much more productive than raising tariffs on US goods.

2. Important emerging threat, the security of undersea cables and pipelines. 

In October 2023, the Chinese-owned container ship Newnew Polar Bear performed a mysterious trip during which several undersea installations in the Baltic Sea were damaged. First, the Balticconnector gas pipeline connecting Finland and Estonia lost pressure, then a cable sustained mysterious damage. Authorities discovered that another cable had been damaged hours earlier.

A few months after that, the Joint Expeditionary Force — a regional military grouping comprising the UK, the Nordic nations, the Baltic nations and the Netherlands — announced a new initiative to track precisely such threats to Baltic Sea infrastructure. Last month, after a further string of suspicious cut cables, the group announced it was activating the initiative, called Nordic Warden. Just a week later, Nato unveiled Baltic Sentry, an operation with naval vessels patrolling the waters above undersea cables and pipelines. Although Baltic Sentry is a Nato operation, it was conceived by Baltic Sea leaders at a meeting in Helsinki. Like Nordic Warden, it is an entirely European undertaking.

This has an important implication at a time when the US has been actively disassociating itself from European security

The Baltic Sea countries have cobbled together a Baltic Sea maritime presence that — while not yet large enough — doesn’t depend on America... on a daily basis, the nations look after their waters. Making America redundant was never their intention; they just knew that constabulary services in their region were not a top US Navy priority. If Trump were to announce tomorrow that America is pulling out of the Baltic Sea, little would change. One might even ask whether anyone would notice. This approach is likely to extend elsewhere as allies assemble enough resources (and some form of nuclear umbrella extended by Britain or France) to render the US good-to-have rather than need-to-have.

3. BYD is upending the extant business models in the global car market by providing advanced driver assistance systems a standard feature across most of its models at no additional cost. 

For years, carmakers have looked to driver assistance software as the key to offsetting declining hardware margins. This held promise as a cash cow, much like tech companies monetise cloud services, a high-margin add-on that would generate billions in new revenue. Tesla, for example, charges $8,000 for its driver assistance software in the US as of April. Mercedes-Benz and GM are among many carmakers banking on monetising assisted driving technology. There are inherent risks to self-driving software, from technology failures to potential cyber security threats. But unlike fully autonomous vehicles, which remain controversial and unproven at scale, advanced driver assistance systems — which enhance rather than replace human control — have already demonstrated their value. 

Studies suggest that these systems, which include highway and traffic assist systems, automatic emergency braking and forward collision warnings, could significantly improve road safety. Research from the Insurance Institute for Highway Safety has shown that cars with these features can reduce rear-end collision involvement rates by up to 50 per cent. Wider adoption could reduce accident frequency by around a quarter, according to research in the UK, while the most common types of accidents would be reduced by 29 per cent with full deployment. Assuming a conservative 30 per cent adoption rate and a $5,000 fee per vehicle, a carmaker selling 10mn cars annually could potentially generate $15bn in revenue a year from self-driving features alone. Some carmakers have introduced subscription models: Tesla, for example, charges $99 a month, which helps generate recurring revenue long after a car is sold. Scale that adoption further — as technology advances and consumer scepticism declines — and the financial potential becomes even more compelling. That explains why automakers have been so eager to monetise the technology. Safety sells. 

The question now is: can it still be sold? BYD is making that question harder to answer. By including advanced driver assistance systems as standard across its line-up — even on its $9,500 Seagull EV — BYD is challenging the pricing strategy that rivals have relied on. Automakers will find it increasingly difficult to justify charging for software in markets where BYD is offering it as standard. The longer-term consequences could be even more disruptive. If BYD’s move forces rivals to slash software prices — or abandon paid models entirely — the industry’s vision of AI-powered, high-margin profits may never fully materialise... Now, with each new market it enters, BYD won’t just be selling more cars, it could start to redefine industry expectations. History suggests that once a technology becomes indispensable, the premium disappears. Power windows, anti-lock brakes, rear-view cameras — all were once luxury features that have become standard. Once consumers get used to something as standard, there is no turning back. Just like seatbelts.

4. Meanwhile, amidst increased competition from Chinese EV makers and delays in the mainstreaming of EV's, European car makers are returning focus on ICE vehicles. 

Global new model launches of ICE and hybrid vehicles are expected to rise 9 per cent this year from 2024, according to S&P Global Mobility. Carmakers are expected to introduce 205 petrol models, down 4 per cent from 2024, while hybrid launches are predicted to rise 43 per cent to 116 models.

5. Germany faces an erosion in manufacturing, especially pronounced among car makers, industrials, and chemicals.

The contraction of Germany’s industry is evident in the fall of market value in the sector. Together, Dax constituents Volkswagen, Thyssenkrupp and BASF have lost €50bn, or 34 per cent, in market capitalisation over the past five years. From 2010 to 2014, carmakers on the Dax index were more valuable on average than their peers in any other sector, but valuations have slipped as demand has started to falter. VW’s deliveries to customers last year slumped by nearly a fifth compared with the pre-pandemic year of 2019. In other industrials, steelmaker Thyssenkrupp has announced plans to reduce its production capacity by up to a quarter and cut 40 per cent of jobs. BASF is looking to cut costs at its Ludwigshafen headquarters, the world’s largest chemical site, by €2bn a year.

An important contributor is the high electricity prices, higher than in competitors.

Production in energy-intensive industries is 20% below pandemic levels, with the country's world-leading chemicals industry being among the worst hit..

According to Destatis data, roughly 40 per cent of jobs and more than half of revenues in Germany’s chemical industry are tied to so-called base chemicals, most of which are derived from gas and crude oil. Producers of the materials, used in plastics, fertilisers and coatings, rely on cheap energy to maintain narrow margins in a highly competitive market... And the sector, which supplies other industries, has long been a bellwether for industrial demand. 

6. Good graphical summary of the problems facing Germany's railways. Deutsche Bahn's intercity service is now less punctual than the continent's worst operator in Britain.

About 72 per cent of Deutsche Bahn’s intercity trains arrived within 10 minutes of their scheduled arrival time in the year to January 2025, compared with 78 per cent of British long-distance trains, according to the FT analysis. Any interaction with the German rail network is also one of the biggest factors affecting the punctuality of long-distance rail travel in central Europe. Services from Germany to Amsterdam, for instance, are delayed by an average of almost 13 minutes, while trains coming to the city from elsewhere are typically within two minutes of their scheduled arrival time... The analysis is based on more than 1.9bn train arrivals at stations that were tracked by the websites from February 2024 until the end of January 2025, amounting to more than 5mn a day... The performances of the rail networks in both the UK and Germany lag far behind some of their European peers. In Austria, Switzerland and the Netherlands, punctuality consistently exceeds 90 per cent. Germany’s neighbours also suffer from Deutsche Bahn’s patchy performance, as its delayed trains have knock-on effects for timetables across central Europe.

In Basel’s central station, trains originating in Germany arrive with an average delay of more than 12 minutes — 12 times higher than those coming from elsewhere. The Swiss network, renowned for its punctuality, has resorted to stopping some late-arriving German services at the border to prevent them disrupting local operations. Deutsche Bahn told the FT that infrastructure was “the key to more punctual railways”, adding that 80 per cent of all delays were caused by the poor state of its network. The company described its infrastructure as “too crowded, too old and too prone to disruptions”... For decades, Germany skimped on maintenance and infrastructure upgrades as successive governments put a higher priority on fixing roads and balancing budgets. According to data by Pro-Rail Alliance, a German railways lobby group, the German government in 2023 spent just €115 per citizen on railway infrastructure, compared with three times that amount in Austria and four times in Switzerland. Andreas Geissler, a transport policy expert at Pro-Rail Alliance, told the FT that investment surged to €190-€210 per citizen in 2024. Over the past 15 years on average the investment stood at just €73 per citizen. 

Deutsche Bahn has labelled 16 per cent of all German railways infrastructure as “poor”, “deficient” or worse. The investment backlog that needs to be dealt with grew by €2bn in 2023 to €92bn, according to Deutsche Bahn estimates.

7. The US federal government paid $18 bn to consulting firms in 2024. 

Elon Musk's cutting of the traditional consulting firm contracts may well result in their replacement by those like Palantir.

Palantir, an analytics firm chaired by Peter Thiel, who worked with Mr Musk at PayPal, has gained a foothold in the Department of Defence and is spreading quickly across the federal government. Among other things, it helps organisations feed their data into artificial-intelligence (ai) tools. In the final quarter of 2024 its revenue from America’s government grew by 45% year on year. Its share price has been on a remarkable ride, more than doubling since Mr Trump’s election in November. Booz Allen Hamilton’s has fallen by a third. Unlike most other software providers, Palantir embeds teams of engineers with its clients to help them make use of its technology. For now, it works on many projects alongside firms such as Accenture and Deloitte. But some also view it as a potential competitor to the big consultancies, particularly when it comes to ai. Mr Thiel has described conventional consulting as a “total racket”.

8. Impact of US aid freeze on Kenya is severe.

Business at hotels, car rentals and shops — even a nail bar — in aid-dependent areas of Kenya has fallen in the weeks since Donald Trump suspended funding to USAID... Hotels were refusing bookings for NGO workers, fearing they wouldn’t be able to settle their bills... Staff working on US-funded projects had begun pulling children from school, abandoning rental properties and heading elsewhere, she added... Hundreds of expatriate aid workers, either directly or indirectly employed by USAID, are languishing without pay, uncertain about schooling for their children, and in some cases poised to leave the country. Estate agents are anticipating a dip in rental markets in leafy neighbourhoods of Nairobi, while financial analysts predicted a slight softening in the value of the shilling. In 2023, the last year for which official data is complete, Kenya received $850mn in US aid, backing more than 230 projects to varying degrees. Projects in higher education, hospitality training for orphans, drought mitigation and water sanitation, all stalled at the stroke of Trump’s pen. Banks are declining to provide emergency loans, uncertain if the tap will ever be turned back on. The agency subcontracted a growing proportion of its work to Kenyan organisations, many of which are not equipped to survive three months without core funding. Please use the sharing tools found via the share button at the top or side of articles. Hardest hit has been healthcare, which at $402mn received nearly half of the US funding.

9. India holds just 0.23% of the world's AI patents.

India ranks 13th globally in AI talent concentration, with 0.42 per cent of LinkedIn members saying they have skills in the technology. The rank positions it behind smaller but technologically advanced nations of Israel, Singapore and South Korea. Despite its vast population and network of science and engineering colleges, India's AI talent pool is not as deep as one might expect... India is experiencing the biggest AI talent exodus in the world, with a net migration rate of -0.76 per 10,000 LinkedIn members who have AI skills, according to the Stanford report.

10. Thanks to shale oil and Canadian imports, US oil imports from Saudi Arabia has been on continuous decline and has now hit its lowest since 1985. 

11. US Treasury Secretary Scott Bessent makes an economic partnership proposal to Ukraine.

Ukraine is endowed with natural resources and other national assets that can drive its postwar economic growth, but only if its government and people are armed with sufficient capital, expertise and the right incentives. The terms of our partnership propose that revenue received by the government of Ukraine from natural resources, infrastructure and other assets is allocated to a fund focused on the long-term reconstruction and development of Ukraine where the US will have economic and governance rights in those future investments... The terms of this partnership will mobilise American talent, capital, and high standards and governance to accelerate Ukraine’s recovery and sends a clear message to Russia that the US is invested in a free and prosperous Ukraine over the long term... The proceeds from future revenue streams would be reinvested back into key sectors focused on unlocking more of Ukraine’s growth assets. The terms of this agreement would also ensure that countries that did not contribute to the defence of Ukraine’s sovereignty will not be able to benefit from its reconstruction or these investments... The US would not be taking ownership of physical assets in Ukraine. Nor would it be saddling Ukraine with more debt. This type of economic pressure, while deployed by other global actors, would advance neither American nor Ukrainian interests. In order to create more value over the long term, the US must be invested alongside the people of Ukraine, so that both sides are incentivised to gain as much as possible.

12. Signatures of reversing consensus on climate change forged at the Paris Agreement 2015

Friedrich Merz... warned that German economic policies had been “almost exclusively geared towards climate protection”, and that “we will and must change that”. Decommissioning coal and nuclear power plants without an adequate replacement in place would “massively jeopardise Germany as an industrial location”, and thus was “out of the question”... the US may abandon climate action at the federal level altogether... (in China) the construction of new coal-fired thermal power plants on the mainland reached a 10-year high in 2024, with almost 100 gigawatts of additional capacity being added to the pipeline. Fewer plants are being shut down as well; about 13 gigawatts of capacity went offline in 2020, as compared to 2.5 gigawatts in 2024... The premium for green bonds — which represents how much extra investors are willing to pay for environmentally-sustainable investments — almost vanished in 2024. Meanwhile, issuances of green bonds from US-based sources are half of what they used to be, and dollar-denominated green bonds now represent only 14 per cent of the global green bond market.

13. Janan Ganesh writes that the pendulum on the anti-woke movement may have swung too far.

Until recently, conservatives put forward a case that had lots of voters nodding: that woke-ism is illiberal dogma; that liberals themselves are too weak to stand up to it. Now, having prevailed, this argument is sliding into free speech absolutism, scolding of the insufficiently patriotic and a general obsession with culture for which the public appetite is smaller... Having rejected woke, voters will be increasingly protective of other liberal gains. Misreading this, and high on themselves, conservatives will end up weirding people out in a major way. We can’t predict the exact form of the over-reach — the right’s equivalent of Defund the Police — but some fatal gilding of the lily is coming. These people don’t know how to take Yes for an answer. It is a wonder that such enthusiasts for western culture should ignore one dictum of it, inscribed on the Temple of Apollo as an eternal warning. “Nothing in excess.”

14. More on the K-shaped recovery facing the Indian economy. On SUV sales

SUV sales grew 14 per cent in 2024, more than double the overall passenger vehicle market’s 5 per cent, according to GlobalData. They accounted for 56 per cent of the car market, up from 51 per cent the previous year.

15. Rana Faroohar has an important point about the Trump administration.

There is a notable silence on these topics from Republican senators and business leaders alike. Plenty of people will say privately that they are worried about Doge’s slash-and-burn techniques. But no one wants to run afoul of Musk or Trump in public for fear of retribution (indeed, I will say that in my 33 years of journalism, I’ve never had as many sources want to speak only on background as they do now).

Max Hastings echoes 

The fear — and it is indeed fear — that suffuses much of the world after these first weeks of the Trump presidency derives from a belief that the great engines of American democracy are being shut down. A supine Congressional majority and a partisan Supreme Court decline to check Trump’s absolutism, and he marches roughshod over the law. He aspires to be a Sun King — contemporaries’ name for France’s Louis XIV (1638-1715) — making all those around him captives of his rays, and doomed if his warmth is withheld.

16. Germany presents a fascinating political experiment in so far as it contains two parts which were in opposing ideological and political factions before the Berlin Wall collapsed. The FT has a good graphic that captures the divide.

This also shows that if this were a first-past-the post voting system, the CDU/CSU would have swept the West and Afd the East. As Times writes, in the recent elections, the two parts voted as different countries.  

If East Germany were still its own country, the hard-right Alternative for Germany, or AfD... would have scored a convincing win in the elections on Sunday, with nearly one in three voters there casting ballots for it. Only two of 48 voting districts outside of Berlin in the former East Germany were not won by the AfD. In a handful of districts in the east, the AfD got nearly 50 percent of the vote... The vote tally in the east mirrored state elections in three eastern races in September... That division... has become a persistent feature of Germans’ voting habits... only 42 percent of Germans in the east voted for traditional West German parties... In the former East, the AfD is increasingly visible. Many members are active in civil society — including several mayors — which means even people who do not vote for the party come in regular contact with it.

And this may owe to the persisting differences between the two parts even after nearly 35 years of reunification.

The vote also signalled the sharply contrasting fortunes of AfD and SPD (which did its worst performance since 1887).

The youngest voters shifted sharply to the Left and AfD. 

Weekend reading links

1. Railways looks set to come the full circle back to government control in the UK. From an FT editorial last week

A bill set for a lightning third reading on Tuesday will return franchised passenger rail services to public hands when existing contracts end or reach a breakpoint — which at least means this renationalisation has little upfront cost. The government says it will produce a more centralised network, under the “directing mind” of a still-to-be-created arms-length body, Great British Railways. It touts the potential to cut costs by removing duplicative bureaucracy, and to simplify the unpopular maze of ticketing.

And this

The Labour government is set to launch legislation to nationalise the railways as a matter of priority, with takeovers of some of the UK’s busiest operators expected within months. Nearly three-quarters of train journeys in Britain are expected to be on nationalised rail services within a year under Labour’s plan... The legislation is intended to renationalise the rest of the railway after about 40 per cent of services were taken over by the previous Conservative administration as operators failed over the past decade... Under the bill, contracts to run train operators that are let to private companies will be permanently returned to the government as soon as they expire.

2. Jean Pisani Ferry has some wise words on green transition costs

The reality is that it’s a combination of supply and demand shocks. The demand shocks caused by the additional investment are obviously positive. The supply shocks are mostly negative, at least in the short term. And the reason for that is that one way or another, you’re basically paying for a resource — a stable climate — you used not to have to pay for. It is the same if the investment is triggered by regulations instead of the pricing of carbon: economic agents are compelled to spend significant amounts for capital expenditures that do not improve the efficiency of capital and labour... the overall magnitude is equivalent to the first oil shock of 1973-74. And the first oil shock isn’t remembered as something very positive...

So essentially, we are going to invest 2 to 3 per cent of GDP for 10, perhaps 25 years. Burning fossil fuels is significantly less capital intensive than investing in clean energy. And we’re substituting that with a system in which upfront investment is required to transform the energy system and to ensure it does not rely on fossil fuels. It means investment that’s normally devoted to improving overall efficiency, improving total factor productivity or saving labour, has to be diverted to saving on fossil fuels. And that’s not going to improve your economic performance. That is, unless — and it’s possible in the long term — the new technology proves to be much more efficient than the old technology. So that’s what makes me hopeful that in the long run, I mean at the 20- to 25-year horizon, it may be that the use of such technologies proves to be more efficient overall. But that does not eliminate the transition cost... job-neutral globally — which I don’t think it will be, because the labour intensity of an EV [electric vehicle] is much lower.

And he has a very good comparison

At the time of the Industrial Revolution, there were agrarian interests versus manufacturing interests: there was a fight between those two strands of capitalism. And I think it’s a bit the same. There is a green capitalism that has developed and has gained strength. It’s a war between two strands of capitalism — green and brown.

3. As the frequency, intensity, and damages from forest fires rise, state governments in the US are reviving an age-old practice of triggering small beneficial fires in an effort to prevent the accumulation of the fuel that sustains large fires. 

According to one study from researchers at Columbia and Stanford, low-intensity fires, a category that includes mild natural fires and prescribed burns, reduce wildfire risk by about 60 percent. Experts also say that prescribed burns have reduced the severity of previous wildfires, including in Yosemite National Park, where researchers found that they helped protect giant sequoias during the Washburn fire in 2022. Most of California’s ecosystems have evolved to adapt to or depend on fire, which can rejuvenate forests and help nutrients return to the soil. But federal and state land management agencies banned intentional burns for many decades, arguing that all fires were dangerous and could hurt the timber industry. This, along with aggressive efforts to suppress wildfires, allowed vegetation to accumulate, a condition that could supercharge blazes...

Federal and state agencies, as well as other groups that work with them, including private citizens and businesses, are setting fires that burn the dry grasses, small trees and other vegetation that could otherwise fuel an intense wildfire... Land managers in the state, including the California Department of Forestry and Fire Protection, and federal agencies have set a target of intentionally burning 400,000 acres annually by next year, an amount of land that when combined would be larger than the city of Los Angeles. The goal is to chip away at the 10 million to 30 million acres that officials estimate would benefit from some form of fuel reduction treatment. In 2022, the most recent year for which there is data publicly available, about 96,000 acres were burned by these land managers... Since then, intentional burn practices, including planned fires and cultural burning by Native American tribes, have been gradually reintroduced. Nowadays, these efforts are carried out by various entities across the state, including Cal Fire, the U.S. Forest Service, tribal organizations and private citizens...

In addition to the need for more funds... controlled burn programs face a number of other hurdles. Already limited in number, firefighters who would staff a prescribed fire are often called away to battle an active blaze. There are also only so many days in a year that conditions are right for a fire, and access is a challenge in some locations. And local communities may oppose a controlled burn... The U.S. Forest Service has said that over 99 percent of these fires go as planned, but mistakes can be destructive. In 2022, the agency lost control of two prescribed burns in New Mexico. The fires merged and grew to become the largest recorded fire in the state’s history, destroying hundreds of homes.

4. What has been driving Nvidia?

5. India R&D facts of the day

Notably, less than 5 per cent of Indian patent citations refer to other Indian patents, reflecting a low level of local knowledge creation and heavy reliance on foreign sources. By comparison, China and South Korea have local citation rates of 10 and 20 per cent, respectively. India also ranked 42nd out of 55 countries on the 2024 International Intellectual Property Index, with an overall score of 38.64 per cent, unchanged from the previous assessment... the ratio of big businesses to unicorns in India is just 0.1, compared to 0.9 in the US, 0.4 in China, 0.5 in Germany, 0.25 in Brazil, and 0.6 in South Korea.

6. Some numbers on ESIC and EPFO deductions

Take the example of Sarita, a (fictitious) new employee in Mumbai earning Rs 15,000 per month (Rs 1.80 lakh annually). She must pay a profession tax of Rs 2,500 annually... Next, Sarita (Rs 1,350) and her employer (Rs 5,850) must pay a total of Rs 7,200 annually to the Employees’ State Insurance Corporation (ESIC). However, getting claims from ESIC is notoriously difficult, effectively making it another tax. ESIC holds Rs 1,17,000 crore in reserves. The claims paid (Rs 14,000 crore) are 83 per cent of contributions (Rs 17,000 crore), and investment income (Rs 7,000 crore) is 41 per cent of contributions (Source: Accounts for year ended March 31, 2023). The numbers reveal a system where contributors have long given up hope of receiving claims. Then you have the Employees’ Provident Fund Organisation (EPFO) triplets. Sarita contributes Rs 1,800 monthly to her EPF, while her employer contributes Rs 600 to her account, plus Rs 75 in administrative charges. In addition, her employer contributes Rs 1,200 to her Employees’ Pension Scheme (EPS) account and Rs 900 for her life insurance (of Rs 7 lakh), under the Employees’ Deposit Linked Insurance (EDLI) scheme.

All these small deductions add up. Sarita pays Rs 25,450 per year (Rs 21,600 EPF + Rs 2,500 profession tax + Rs 1,350 ESIC), leaving her with Rs 1,54,550 from her salary of Rs 1,80,000. Meanwhile, her employer pays a total of Rs 39,250 (Rs 7,200 EPF, Rs 24,400 EPS, Rs 900 EDLI, Rs 900 administrative charges and Rs 5,850 ESI), making Sarita’s total cost to the employer Rs 2,19,250. The difference (Rs 64,700) between her employer’s cost and Sarita’s take-home pay is 42 per cent—coincidentally the same tax rate for individuals earning over Rs 5 crore annually. Effectively, the lowest-paid employees are taxed at the same rate as the highest earners.

7. Fascinating story of William Phillips, the famous economist of Phillips curve fame, who travelled from a farm in New Zealand to become the world famous economist at LSE who in 1949 demonstrated to an astounded audience of superstar economics professors "the first ever computer model of a country's economy", the Moniac. 

Phillips might have been expected to go to university — he passed every exam — but there was a problem. In 1929, a collapse in share prices... had set in motion the Great Depression. Its effects lasted for years, and reached as far as a dairy farm in Te Rehunga. Prices for agricultural commodities plummeted, and Harold and Edith simply couldn’t afford to send their son off to study. Phillips became an apprentice electrician at a hydroelectric power station instead... In 1935, the apprentice electrician left Te Rehunga to see the world. Steve Levitt, a co-author of Freakonomics, was once dubbed “the Indiana Jones of economics”, but if that swashbuckling label belongs to anyone, it’s Phillips. In between leaving New Zealand and his first brush with economics in 1946, Phillips worked in a gold mine, hunted crocodiles, busked with a violin, rode the Trans-Siberian railway and was arrested by the Japanese and accused of spying. He eventually pitched up in London and signed up for the LSE. Then the war started, and he joined the Royal Air Force, which promptly sent him back to the other side of the world. In the RAF, Phillips established himself as an outstanding engineer, working to upgrade the obsolete aeroplanes that were supposed to defend British-held Singapore from Japan. Days before Singapore surrendered, he found himself on the last convoy to flee the city, onboard the Empire Star. The cargo ship designed to carry 23 passengers had been packed with 2,000, many of them women and children. When the convoy was discovered and attacked by Japanese planes, Phillips found a new use for his talents as an engineer. He brought a machine gun up on deck and improvised a mounting for it. Then he stood there for hours, fending off the attackers as bombs fell around him. 

This extraordinary performance earned him the MBE medal, but didn’t spare him from spending more than three years in a Japanese prisoner-of-war camp. Conditions were bad. Phillips later said that the small men survived and the taller men starved. He was one of the small ones. By the end of the war, he weighed just seven stone (45kg). To keep everyone cheerful and up to date on news from the outside world, Phillips continued with his engineering improvisations. He built concealed radio sets, one of which was tiny enough to be hidden from the guards in the heel of his shoe. He would have been tortured and killed had it been discovered. He also designed and built little immersion heaters, which the inmates used every evening to make hundreds of morale-boosting cups of tea. The guards never worked out why the camp lights flickered and dimmed each evening... In the summer of 1945, he was one of thousands of men transferred to a death camp, where they watched their captors mount machine guns on the walls, pointing inwards, and were forced to dig their own mass graves... When Phillips returned to London at the war’s end, he resumed his studies at the LSE. He took up sociology, a degree that contained some basic economics modules, and became intrigued by the engineering-style mathematical equations that were becoming popular in the new subject of macroeconomics... The LSE’s establishment rushed to give Phillips a job. Within a decade, he had been made professor, then a rare honour in British academia. For a man with no honours degree and no economics qualifications of any kind, he hadn’t done so badly.

The Moniac, or Phillips machine, could solve differential equations using hydraulics and not differential calculus. It could solve nine differential equations simultaneously and within a few minutes. 

Even in the 1950s, economic models were worked out by rooms full of human “computers”, typically women armed with paper and calculators to provide the mathematical equivalent of a typing pool. It would be years before digital computers could support economic models as complex as the Moniac’s. Phillips made 14 machines in all, most Mark II Moniacs, expanded versions of the original machine. The original machine went to the University of Leeds. Others ended up at Cambridge, Harvard, Melbourne, Manchester and Istanbul. Some went to corporations or ambitious governments in developing countries, from the Ford Motor Company to the Central Bank of Guatemala... If the Moniac was the result of exquisite engineering skill, Phillips’s flash of inspiration — that hydraulics could be used to solve complex systems of equations — was close to genius...

Each equation quite literally had to be carved into the flow-control system of the Moniac, in small squares of Perspex set in a neat white frame, with a thermometer-like scale along the side. The equations themselves were slots, one in each piece of Perspex, each with a particular shape and angle, snugly holding a peg that ran smoothly on brass rails. Each peg was attached to a float and a sluice gate, so that as the water level in a tank rose, the peg would move up and — depending on the shape of the slot — would also move sideways, opening or closing the sluice gate. Phillips had calibrated his equations to what was then known about the British economy: how much income people tended to put aside as savings, for example, or the overall response of supply and demand to prices. To his surprise, he found that the machine was watertight enough to be accurate to within 2 per cent — a higher level of precision than was required given the quality of the economic statistics of the day. 

8. Some facts about housing in the US

Real prices in the US are currently 25 per cent above the pre-crisis peak in 2006... Astonishingly, the US is building no more new homes and 80 per cent fewer “entry level” homes than it was half a century ago — when the population was much smaller. And the time it takes to complete a new multi-unit dwelling has doubled, with most of that increase coming in the past two decades — as “NIMBY” resistance spread.

Since 2000, according to Zillow, the average household income has doubled but the average price for its listings has tripled to $360,000. Over that period, the time it takes to save for a 20 per cent down payment has risen by nearly half to eleven years. And the share of income that goes to mortgage and insurance payments has risen by more than a third to 35 per cent — into the unaffordable zone. Because developers are building homes much more slowly than Americans are forming new households, the shortage is growing by several hundred thousand residences a year... Housing takes up a greater and growing share.

9.  Interesting points about the need to map supply-chain risks.

Data from the US commerce department indicates that 57 per cent of industries in America would require six months to return to normal capacity if there was even a single week of transport disruption... there are unexpected areas of workforce and trade vulnerability that couldn’t have been predicted without burrowing deep into granular data down many levels of global supply chains... the department has developed the Scale Tool, a computational system which includes data from the entire American goods economy. This is identified and ranked across various industries, geographies and risk metrics (geopolitical, environmental, national security, public health, and so on). The aim is to create an extremely granular picture of where vulnerability and resiliency in the American economy actually lies. That has required Raimondo and her officials to become familiar with things as esoteric as, for example, the components that go into an AI data centre cooling system. While it’s been widely understood for some time that AI capacity was a potential point of vulnerability for the US, this was thought of mainly in terms of the large amounts of power required for data centres, and whether the grids supporting them were resilient.

10. The definitive graph that blares out China's disturbing hold on clean manufacturing technologies.

11. India textile industry fact of the day

Between 2016 and 2023 the value of Indian apparel exports fell by 15%, whereas Bangladesh’s increased by 63%.

12. Peru's spectacular rise as a blueberry exporter in a graphic.

Back in 2013 Peruvians earned about $17m exporting blueberries; by last year receipts had soared to $1.7bn. In 2019 Peru became the world’s single biggest exporter of fresh blueberries. Nowadays it sends more than twice as many berries abroad as its closest rivals... Peru’s blue revolution relies on newfangled “low chill” varieties, developed in the United States, that thrive on Peru’s coast. The International Blueberry Organisation, an industry group, says that in 2022 the yield of a typical Peruvian blueberry farm was nearly double the global average (which is nine tonnes per hectare)... it takes only about two years for a new farm in Peru to start turning a profit. In other places four years is more common... Blueberry farmers have also gained from trends that have boosted all manner of Peruvian produce. These include tax breaks and irrigation megaprojects that have opened up land along Peru’s desert coastline. Between 2000 and 2023, total annual Peruvian farm exports grew 16-fold to $10.5bn.

13. Japanese company valuations.

The price-to-book ratios of listed companies, a measure of their value relative to the worth of their assets, is a mere 1.5. By contrast, American companies are worth five times as much as the assets they hold. Japan’s non-financial firms now hold ¥372trn ($2.6trn) in cash and bank deposits, a figure that has risen by 82% in nominal terms since the end of 2012, suggesting that too many executives are resting on their laurels.

14. Developing country cities are growing upwards.

And this

This is a welcome development, most likely a reflection of having hit the limits to suburban sprawls. This process must be expedited.