|
The Economist Articles for Apr. 3rd week :Apr. 21th(Interpretation)
Economist Reading-Discussion Cafe :
다음카페 : http://cafe.daum.net/econimist
네이버카페 : http://cafe.naver.com/econimist
Leaders | A $25trn hit
Global warming is coming for your home
Who will pay for the damage?
Think about the places vulnerable to climate change, and you might picture rice paddies in Bangladesh or low-lying islands in the Pacific. But another, more surprising answer ought to be your own house. About a tenth of the world’s residential property by value is under threat from global warming—including many houses that are nowhere near the coast. From tornadoes battering midwestern American suburbs to tennis-ball-size hailstones smashing the roofs of Italian villas, the severe weather brought about by greenhouse-gas emissions is shaking the foundations of the world’s most important asset class.
The potential costs stem from policies designed to reduce the emissions of houses as well as from climate-related damage. They are enormous. By one estimate, climate change and the fight against it could wipe out 9% of the value of the world’s housing by 2050—which amounts to $25trn, not much less than America’s annual gdp. It is a huge bill hanging over people’s lives and the global financial system. And it looks destined to trigger an almighty fight over who should pay up.
Homeowners are one candidate. But if you look at property markets today, they do not seem to be bearing the costs. House prices show little sign of adjusting to climate risk. In Miami, the subject of much worrying about rising sea levels, they have increased by four-fifths this decade, much more than the American average. Moreover, because the impact of climate change is still uncertain, many owners may not have known how much of a risk they were taking when they bought their homes.
Yet if taxpayers cough up instead, they will bail out well-heeled owners and blunt helpful incentives to adapt to the looming threat. Apportioning the costs will be hard for governments, not least because they know voters care so much about the value of their homes. The bill has three parts: paying for repairs, investing in protection and modifying houses to limit climate change.
Insurers usually bear the costs of repairs after a storm destroys a roof or a fire guts a property. As the climate worsens and natural disasters become more frequent, home insurance is therefore getting more expensive. In places, it could become so dear as to cause house prices to fall; some experts warn of a “climate-insurance bubble” affecting a third of American homes. Governments must either tolerate the losses that imposes on homeowners or underwrite the risks themselves, as already happens in parts of wildfire-prone California and hurricane-prone Florida. The combined exposure of state-backed “insurers of last resort” in these two states has exploded from $160bn in 2017 to $633bn. Local politicians want to pass on the risk to the federal government, which in effect runs flood insurance today.
Physical damage might be forestalled by investing in protection in properties themselves or in infrastructure. Keeping houses habitable may call for air conditioning. Few Indian homes have it, even though the country is suffering worsening heatwaves. In the Netherlands a system of dykes, ditches and pumps keeps the country dry; Tokyo has barriers to hold back floodwaters. Funding this investment is the second challenge. Should homeowners who had no idea they were at risk have to pay for, say, concrete underpinning for a subsiding house? Or is it right to protect them from such unexpected, and unevenly distributed, costs? Densely populated coastal cities, which are most in need of protection from floods, are often the crown jewels of their countries’ economies and societies—just think of London, New York or Shanghai.
The last question is how to pay for domestic modifications that prevent further climate change. Houses account for 18% of global energy-related emissions. Many are likely to need heat pumps, which work best with underfloor heating or bigger radiators, and thick insulation. Unfortunately, retrofitting homes is expensive. Asking homeowners to pay up can lead to a backlash; last year Germany’s ruling coalition tried to ban gas boilers, only to change course when voters objected to the costs. Italy followed an alternative approach, by offering extraordinarily generous, and badly designed, handouts to households who renovate. It has spent a staggering €219bn ($238bn, or 10% of its gdp) on its “superbonus” scheme.
The full impact of climate change is still some way off. But the sooner policymakers can resolve these questions, the better. The evidence shows that house prices react to these risks only after disaster has struck, when it is too late for preventive investments. Inertia is therefore likely to lead to nasty surprises. Housing is too important an asset to be mispriced across the economy—not least because it is so vital to the financial system.
Governments will have to do their bit. Until the 18th century much of the Netherlands followed the principle that only nearby communities would maintain dykes—and the system was plagued by underinvestment and needless flooding as a result. Governments alone can solve such collective-action problems by building infrastructure, and must do so especially around high-productivity cities. Owners will need inducements to spend big sums retrofitting their homes to pollute less, which benefits everyone.
Wie het water deert
At the same time, however, policymakers must be careful not to subsidise folly by offering large implicit guarantees and explicit state-backed insurance schemes. These not only pose an unacceptable risk to taxpayers, but they also weaken the incentive for people to invest in making their properties more resilient. And by suppressing insurance premiums, they do nothing to discourage people from moving to areas that are already known to be high-risk today. The omens are not good, even though the stakes are so high. For decades governments have failed to disincentivise building on floodplains.
The $25trn bill will pose problems around the world. But doing nothing today will only make tomorrow more painful. For both governments and homeowners, the worst response to the housing conundrum would be to ignore it.
Finance and economics | Free exchange
Daniel Kahneman was a master of teasing questions
How a psychologist transformed economics
illustration: álvaro bernis
Apr 4th 2024
Winners of the Nobel prize in economics tend to sprinkle their papers with equations. Daniel Kahneman, who died on March 27th, populated his best-known work with characters and conundrums. Early readers encountered a schoolchild with an iq of 150 in a city where the average was 100. Later they pondered the unfortunate Mr Tees, who arrived at the airport 30 minutes after his flight’s scheduled departure, and must have felt even worse when he discovered the plane had left 25 minutes late. In the 1970s readers had to evaluate ways to fight a disease that threatened to kill 600 people. In 1983 they were asked to guess the job of Linda, an outspoken, single 31-year-old philosophy graduate.
Kahneman used such vignettes to expose the seductive mental shortcuts that can warp people’s thoughts and decisions. Many people, for example, think it more likely that Linda is a feminist bank-teller than a bank-teller of any kind. Presented with two responses to the disease, most choose one that saves 200 people for certain, over a chancier alternative that has a one-third chance of saving everyone and a two-thirds chance of saving no one. But if the choice is reframed, the decision is often different. Choose the first option, after all, and 400 people die for sure. Choose the second and nobody dies with a one-third probability.
Teasing questions came easily to Kahneman, even in his sleep, according to “The Undoing Project”, a book by Michael Lewis. Some sprang from his teaching, which was not confined to ivory towers. He once explained the idea of “regression to the mean” to flight instructors in Israel’s air force. The reason pilots tended to improve after a sloppy manoeuvre was not because the instructor screamed at them, but because the chances of an improvement are higher if the prior performance was unusually bad.
Kahneman was a harsh grader of his own incorrigible self, attentive to his own lapses. One of his early hit papers exposed the kind of methodological muddles to which he himself was vulnerable, such as the misplaced confidence that an outlier, like a child with an iq of 150, would not skew even a small sample.
Kahneman also had a lifelong—and life-preserving—interest in gossip. His childhood, as the son of Lithuanian Jews living a comfortable but edgy pre-war existence in Paris, was full of talk about other people, he once wrote. Jews in Europe had to “assess others, all the time,” a friend of his told Mr Lewis. “Who is dangerous? Who is not dangerous?…People were basically dependent on their psychological judgment.”
Gossip was both a source of his work and an intended target. His bestselling book, “Thinking Fast and Slow”, was written not for decision-makers, but for “critics and gossipers”. Decision-makers were often too “cognitively busy” to notice their own biases. Pilots could be corrected by observant co-pilots and overconfident bosses might be chastened by whispers around the water-cooler, especially if the whisperers had read Kahneman’s book.
To spread psychological insight, Kahneman once tried to add a course on judgment to Israel’s school curriculum. He expected the project would take a year or two. It took eight, by which time the ministry of education had lost enthusiasm; a humbling example of what he and Amos Tversky, his frequent co-author, called the “planning fallacy”. He had more success inveigling psychological wisdom into the well-guarded realm of economics, which had clung to a thin but tidy model of human decision-making.
How did he do it? One answer is that he teamed up with Tversky, whose elegant mind was as ruthlessly tidy as his desk. They incorporated the cognitive illusions they had discovered into a model called “prospect theory”. According to this theory, people’s well-being responds to changes in wealth, more than levels. The changes are judged relative to a neutral reference point. That point is not always obvious and can be recast: a bonus can disappoint if it is smaller than expected. In pursuit of gains, people are risk averse. They will take a sure win of $450 over a 50% chance of winning $1,000. But people gamble to avoid losses, which loom larger than gains of an equivalent size.
Prospect theory translated this model of decision-making from vignettes into the language of algebra and geometry. That made it palatable to economists. Indeed, the discipline began to claim this sort of thing as its own. Applications of psychology “came to be called behavioural economics”, lamented Kahneman, “and many psychologists discovered that the name of their trade had changed even if its content had not.”
The cold-hand fallacy
Even as economics was rebranding psychology, Kahneman revived an older economic tradition: “hedonimeters”, gauges of pleasure and pain that Francis Edgeworth, a 19th-century economist, had imagined. Kahneman’s hedonimeter simply asked people to rate their feelings moment-to-moment on a scale. He found that people’s ratings were often at odds with what they later recalled. Their “remembering” selves put undue weight on the end of an experience and its best or worst moment, neglecting its duration. People would rather keep their hand in painfully cold water for 90 seconds than for a minute, if the final 30 seconds were a little less cold than the preceding 60. Likewise, people sign up for hectic tourist itineraries because they look forward to looking back on them, not because they much enjoy them at the time.
The implications of this discovery extend into philosophy. Which self counts? Despite its manifest flaws, the curatorial self, artfully arranging unrepresentative memories into a life story, is dear to people. “I am my remembering self,” Kahneman wrote, “and the experiencing self, who does my living, is like a stranger to me.” Now his experiencing self has done its living. And it is up to the many people he touched to do the remembering for him. ■
Leaders | The sense of an ending
The rights and wrongs of assisted dying
Britain’s next great social reform is coming. Here’s how it should work
Britain has become a much more liberal country in recent decades. In 1981 only 12% of Britons thought that homosexuality was justifiable, according to the World Values Survey; in 2022 the figure was 66%. Over the same period the proportion of people who were accepting of divorce rose from 18% to 64%. Where the public has led, politicians have followed: same-sex marriages were legalised in 2013; no-fault divorces became possible in 2022. That pattern may well be about to repeat itself with assisted dying.
Over two-thirds of Britons support changing the law to let someone help in the suicide of a person with a terminal illness. Assisted dying has a good chance of getting on the statute book in the near future. Bills are already in progress on the Isle of Man, in Jersey and in Scotland. Sir Keir Starmer, the Labour leader, is sympathetic and has promised a free vote among mps if his party wins the next general election.
If The Economist had a vote, it would be unequivocally in favour. The case for assisted dying is, at its core, one of individual freedom. Britons have the right to marry whom they want. They have the right to roam. Through an obscure medieval law, some even have the right to drive sheep across London Bridge. They should have the right to choose the manner and timing of their death. The more complex question is what form an assisted-dying regime should take. That is not just to ensure safeguards against abuses, though it must undoubtedly do that. It is also to make sure that the law is not drawn too tightly.
Britain is in many ways late to the issue (as are countries like Ireland and France; a bill was presented to the French cabinet this week). Belgium, the Netherlands, Oregon and Switzerland have had assisted-dying laws for decades. Seventeen jurisdictions have passed laws since we argued in favour of legalisation in 2015. Although opponents of assisted dying have deeply held beliefs, and raise legitimate concerns, the actual experience of these many jurisdictions strengthens the arguments in its favour.
Take concerns about coercion. Critics argue that no regime could ever fully protect the vulnerable from relatives looking to claim an inheritance, or indeed from a state seeking to cut health-care costs. Yet the evidence suggests that cases of coercion are extremely rare. The state should do its best to help people live well, whether through social support or palliative care, but if it cannot, those who truly wish to die should not be obliged to suffer. In places where an assisted death remains illegal, only those with money have the option to take matters into their own hands—on average one Briton a week travels to Switzerland to end their life there. The rights of hypothetically vulnerable patients are taking precedence over the rights of those who are actually in anguish.
Some critics say that assisted dying is a “slippery slope”. If this is the fundamental reason for your opposition, you are pretty much conceding the principle that there are indeed instances when it would be right to help someone die—it’s the scope that is the problem. In any case experience suggests that no such slope exists. Although eligibility criteria for an assisted death have expanded in Belgium and the Netherlands, they have never done so in jurisdictions whose initial laws were restricted to terminally ill adults. Canada’s decision to postpone the extension of assisted-dying laws to the mentally ill until 2027 shows that it is possible to press “pause”. True, the numbers of people seeking assisted deaths is increasing: they now make up 4% of all deaths in Canada and 5% in the Netherlands. Yet if those higher figures are an expression of people’s desire to make use of a new freedom, as is overwhelmingly likely, they are a reason to pass laws, not to block them.
Whether out of conviction or caution, politicians tend to respond to such concerns by writing laws that are based on Oregon’s model, which requires a person to be terminally ill with less than six months to live to be eligible for an assisted death. This is the approach being followed in Ireland. France’s assisted-dying bill is also limited to the terminally ill, even though a citizens’ assembly convened by President Emmanuel Macron supported a broader law for those suffering unbearably from an incurable illness. The Oregon template is also likely to be the one mps in Westminster will eventually end up debating, if previous bills are a guide. It is too restrictive.
Strict time constraints mean that people often die before they can receive the lethal medication. And many people suffer terribly with a disease that is not terminal. Canada’s model, which allows someone to determine for themselves whether their suffering is unbearable, is fairer. A person there must be suffering from a serious and incurable medical condition and must wait 90 days to reflect on their decision. Arguments that this broader scope devalues disabled lives are well-meaning but paternalistic. Three-quarters of Canadians with disabilities support the existing law.
The thorniest issues arise when it is hard to determine whether people are of sound mind. Canada’s decision to postpone the extension of assisted-dying laws to people with mental-health disorders is sensible for this reason. Mental suffering is as real as physical suffering, yet society’s understanding of it is still inadequate. Doctors must be able to tell between a considered, rational wish to die and a suicidal impulse, a distinction many clinicians feel unable to make.
Dementia, which already afflicts one in 11 Britons over 65, is also a difficult area. It is possible for someone in the early stages of dementia to make a request in advance for an assisted death, but their wishes when the time comes should prevail. When in doubt, the best rule of thumb is not to proceed.
The right balance
There is no guarantee that politicians in Britain will vote in favour of assisted dying. But when they do debate the issue, they should not default to the narrowest definition of what is a basic human right. All adults of sound mind who are enduring unbearable suffering with no prospect of recovery should be able to choose the way they die.
Asia | After the fight, then what?
Myanmar’s junta is losing ever more ground
Our correspondent spent three days with one rebel group
photograph: getty images
Apr 11th 2024|daw noh kue
Across myanmar, the three-year war to overthrow the military junta that seized power in a coup in 2021 is far from won. But the popular uprising the coup provoked has attracted a new generation of fighters, who are making ground throughout the country. The junta has reportedly lost control of another part of its border with Thailand to armed rebels. The checkpoint at Myawaddy, an important land crossing, is thought to have fallen into the hands of Kayin (also known as Karen) militias. This is a setback for the regime as it is close to Yangon, the economic capital.
In the west, Rakhine and Chin militias control a key border trade-post with India and a checkpoint with Bangladesh, while in the north Kachin soldiers are getting close to capturing the last major land crossing with China. Your correspondent spent three days with the Karenni Army (ka) in a remote part of Kayah state in eastern Myanmar. It was clear that these forces are now thinking beyond the battlefield, to what happens if, improbable as it may seem, they win.
Rugged and landlocked, and with a population of just 300,000, Kayah (also known as Karenni) is the smallest and least developed of Myanmar’s seven ethnic states. The Kayah are used to war. They have been fighting for the right to self-determination ever since Myanmar’s independence from Britain in 1948. The Kayah launched their latest campaign on November 11th. Since then they boast of having captured 65 Myanmar army posts.
map: the economist
“Our army now controls more than 70% of Karenni state,” says Major-General Aung Mynt. He is in charge of the ka and the Karenni National Defence Force (kndf), a 10,000-strong combined force formed after the coup. Recently they captured Shardaw, a strategic township on the Thai frontier. They now control the border.
The war has taken its toll on the population. Hundreds of civilians, mainly women and children, have been killed. Airstrikes and shelling by the armed forces have displaced more than 80% of Kayah’s population. Many people have sought refuge in Shan state or in nearby forests. Some make the four-day hike to Daw Noh Kue, a village near the Thai border which has become a refugee camp for thousands of displaced people. The camp is run by the Karenni National Progressive Party, the ka’s political wing.
Despite the hardship that comes with war, tiny Kayah is ahead of the curve not only militarily, but also in preparing for the future. It was the first state in Myanmar to establish an Interim Executive Council (iec). Made up of political, civil-society and militia leaders, the iec aspires to join a democratic federal union to be set up as soon as the military regime is toppled. In the meantime it is co-ordinating and organising civil administration for the townships conquered by the ka and its allies.
“We are well aware that the international community may worry about a power vacuum and warlordism,” says Khu Tor Reh Est, who heads the iec’s justice department. He says the council is making preparations to forge “a federal army” out of the myriad armed groups now active in Kayah and “to offer education opportunities to the youth who have joined the fight and choose to return to civilian life”.
This drive by armed rebels to future-proof their territorial gains could be glimpsed in a dusty field in Kayah, where 40 young men and women took part in drills such as push-ups and planks. They were training not for the battlefield, but for the courtroom. After breakfast the students trooped into a hall where a judge from neighbouring Shan state taught them about marriage law. Once they pass their exams, these students will hike back over the mountains to take up their new jobs as lawyers and judges—in what they hope could soon be a free country.
China | An ageing autocracy
China’s high-stakes struggle to defy demographic disaster
The Communist Party puts its faith in robots, gene-therapy and bathing services
photograph: magnum/jim goldberg
Apr 9th 2024|beijing
If china’s old people formed their own country, it would be the fourth most populous in the world, right behind America. This silver-haired state would be growing fast, too. China’s over-60 population sits at 297m, or 21% of the total. By 2050 those figures are expected to reach 520m and 38%. Yet demographers describe China’s future as greyer—and smaller. While its older cohorts are growing, younger ones are not (see chart). China’s total population declined for the second year in a row in 2023. Its labour force has been shrinking for most of the past decade.
chart: the economist
China’s economy risks shrinking, too, as a result. With an enormous burden of care on the horizon, the government senses an impending disaster. To date its efforts have focused on boosting the fertility rate (average births per woman), which stands at 1.2—far below the 2.1 required to keep the population stable. Now, though, it is talking about adaptation. During his state-of-the-nation speech last month, the 64-year-old prime minister, Li Qiang, sketched out what he called a “vigorous national strategy” on ageing, covering everything from insurance to pensions.
China is far from the only country facing demographic decline. The populations of Japan, Italy, South Korea and many other places are expected to shrink at an even faster rate over the next two decades. The median age in Japan has risen to nearly 50, whereas in China it is around 40. And it could be argued that China has another advantage: its autocratic government need not cater to elderly voters, whose electoral influence often distorts policy in democracies. In fact, the elderly in China expect little from the state.
Chinese officials, then, appear to have no cause for timidity. On top of being vigorous, one might have expected Mr Li’s plan to be bold. So far, though, China’s leaders have not pursued the types of reforms needed for their country to escape its demographic destiny. And the longer they wait, the harder their task becomes.
Broadly speaking, China faces three big challenges. The first is how to counteract the decline in the labour force in order to avoid a slowdown in gdp growth. Over the past four decades the economy has expanded by 9% a year, on average, aided by a bulge of working-age adults. Now, though, many of these workers are hitting retirement age. Worse, China is getting old before it gets rich. In 2008, when Japan’s population started to fall, its gdp per person was already about $47,500 in today’s dollars. China’s is just $21,000. As more of that money is spent on protecting ageing citizens, less of it will be available for the working generation to consume or invest.
Still, there is much that China can do to keep its economy growing. To start, it could raise the retirement ages for drawing a public pension. China’s are among the world’s lowest. Most men can stop working at 60. Women who work in offices can retire at 55 and those in factories at 50. Since these rules were set last century, the average life expectancy in China has risen from under 60 to close to 80. “If China’s elderly were to have the same labour force participation as in Japan—not a very ambitious target—by 2035 some 40m more people would be at work,” writes Bert Hofman of the National University of Singapore. Officials have been floating reforms since 2008, but only now do they seem serious. Observers expect a staged increase in retirement ages to begin next year.
Meanwhile, China can make better use of its workers. Half of Chinese aged 20 to 24 have attended university or vocational college, compared with just 7% of those who are about to retire. In rural areas, though, few people make it past high school. Improving the skills of this group would go a long way. Mr Hofman reckons that, all other things being equal, the shrinking labour force will cost China one percentage point of gdp growth each year over the next decade. But a longer-working, better-educated labour force could cancel out that effect, he says.
Officials might also think harder about what Chinese workers do and where they do it. About a quarter of them work in agriculture, compared with less than 3% in rich countries. China’s leader, Xi Jinping (age 70), talks a big game about creating high-productivity jobs. These are likely to be in cities. But China’s hukou, or household registration system, impedes the movement of workers. The country’s urbanisation rate is about 65%. It should aim for 75-80%, says Alicia Garcia-Herrero of Natixis, a bank.
In the longer term, demographers believe more machinery and labour-saving technology will also help compensate for a smaller labour force. China has about 400 robots per 10,000 workers, which is higher than most countries. But it is still less than half of South Korea’s level of automation. China is trying to catch up. In 2022 half of all the industrial robots installed worldwide were fitted in China, according to the International Federation of Robotics. Assuming the country is able to double its number of such machines to 3m by 2050, “the ‘robot dividend’ could make up for more than half of the future labour shortage”, says a study led by researchers at Beijing Foreign Studies University.
Save yourselves
If China’s first challenge is how to produce as many goods and services as possible from a diminished workforce, the second is how to make sure the elderly have a sufficient claim on those items. At the moment, many old people rely on their families for support. That might please Mr Xi, who often talks about the Confucian virtue of filial piety. Shortly after he came to power in 2012, China made it illegal for children to neglect their parents. But with fewer young people around, oldsters will increasingly have to support themselves.
Pensions are the solution in most countries, and China has its own schemes. The largest state-run fund relies on contributions from employees and companies. It pays out about 3,600 yuan ($500) a month on average, or around 50% of what recipients were earning before they retired. That compares with over 60% in the oecd, a club of rich countries. The Chinese beneficiaries get enough to pay for basic expenses in most urban areas. But the fund only covers salaried workers in cities, less than half of the labour force. A separate scheme covering most other workers relies on state subsidies. It pays out a measly 200 yuan a month on average.
A lack of generosity is not the only problem. As the number of retirees swells, these schemes are running out of money. The larger one is on track to go broke by 2035, according to projections by a government think-tank. To maintain them both at their current benefit levels, spending would have to double by 2050, reaching 10% of gdp. (Pensioner benefit spending in Britain, by contrast, is about 5% of gdp.)
In order to ease its burden, the government is trying to convince more people to sign up for private pensions. Since 2022 workers have been able to set aside savings in tax-deferred accounts accessible upon retirement. Only 50m people have enrolled so far. Most of the accounts are still empty. Officials say workers don’t understand the importance of pension planning. But a deeper problem is that many Chinese distrust financial products, preferring to put their money in property.
That leaves the government with some tough choices to make. It could press companies to contribute more to the larger state-run pension scheme (many smaller firms dodge this responsibility). Or the government could raise taxes to fill the gap in its funding. That would involve root-and-branch reform of the fiscal system, says Christine Wong of the National University of Singapore. China’s tax revenue accounts for about 20% of gdp, compared with an average of 34% across the oecd.
Another option is to make the state’s pension schemes even less generous. But that risks sending more old people into poverty. In contrast to many Western countries, the elderly in China tend to be poorer than people from younger generations. A study by researchers at Peking University found that 13% of China’s over-60s lived on less than 300 yuan a month in 2020. So this option appears to be a non-starter. “We will continue to increase basic pensions,” said Mr Li last month.
Invest in silver
It will be tricky enough for the government to ensure that the elderly have a sufficient claim on the country’s output. But it must also make certain that the economy is producing the right stuff to satisfy an older population’s needs. That is the final challenge—and the government is relying on market forces to play a role in allocating resources. Mr Li has promised to “develop the silver economy”, a term used to describe goods and services aimed at old people. The sector will be worth 30trn yuan by 2035, up from 7trn today, according to official estimates.
Companies see opportunities, producing such things as medical equipment that can monitor old people’s health at home. The demand for nutritional supplements like calcium has increased. Analysts reckon the market for adult diapers could overtake the one for infant nappies by 2025. Meanwhile, the state is subsidising private investment in everything from companion robots to anti-ageing gene therapy.
But when it comes to more substantial care services, the scale of demand is such that the government will have to step up. As the number of old people suffering from chronic diseases and disabilities increases, the potential cost of long-term care nationwide will triple to $247bn per year by 2050, according to estimates from researchers at Chongqing Technology and Business University.
In cities like Shanghai, where local coffers are flush, the government seems to be doing a good job. Officials have launched a programme to renovate the houses of old people, adding lifts and handrails. Cheap community canteens, which deliver food, are being built. Officials also subsidise home bathing services for those with disabilities or dementia, taking notice of a practice that is common in Japan.
Most local governments, though, are short of cash. The care homes they maintain are either shoddy or full. Staffing is a problem, too. China has 500,000 trained carers. It needs 6m, estimates Xinhua, an official news agency. In rural areas, officials are relying on what they call “mutual aid” projects, where younger old people help care for older ones.
For now few are complaining. Many oldsters have lived through far more difficult periods, such as the great Chinese famine and the Cultural Revolution. Lauren Johnston of the University of Sydney calls China’s elderly the “suck-it-up generation”. Indeed, they were forced to do just that when the government lifted most of its covid-19 restrictions in late 2022, without having adequately prepared for a big wave of the disease. More than 1m people are thought to have died in the months that followed. Most were old. The ruling Communist Party, which covered up the death toll, paid no real political price.
But China’s leaders do not completely ignore the feelings of old people. One reason so many died of covid was because the government refused to mandate vaccination, partly out of fear of a backlash from the elderly. The next generation of oldsters may have more considerable demands. They will have grown up during boom times and may expect to while away their sunset years in comfort. If the party gets things wrong, its biggest critics may not be young liberals, but old curmudgeons. ■
United States | Conservatives on campus
A challenge to leftist bias moves into America’s public universities
Florida leads a push against prevailing progressivism
Hamiltonians at restphotograph: alamy
Apr 11th 2024|gainesville
In 1951 a 25-year-old Yale graduate published a 240-page polemic inveighing against his alma mater’s left-leaning bias. The book launched the career of William F. Buckley, the most influential conservative intellectual of the post-war era. Although Buckley managed to reshape the Republican Party, his war against academia proved less successful. Conservatives still haven’t given up on changing the academy. The most robust reform momentum now is building at public university systems. In Florida, in particular, a trio of Yale alumni have ambitious plans to change the future of higher education.
Ron DeSantis, the governor of Florida, who graduated from Yale in 2001, likes to say that his state is “where woke goes to die”. In universities he put in place a tenure-review process, which critics say weakened academic freedom, and he has used his appointment powers to influence institutions. At New College of Florida, a public liberal-arts college that had been a bastion of progressivism, he appointed new trustees who fired the president and replaced him with a former Republican lawmaker. Scores of faculty and students left.
New College, which had fewer than 700 students in the autumn of 2022, has drawn national attention. Yet much more consequential reforms are under way at the University of Florida (uf), the state’s flagship university and home to some 60,000 students. It ranks as one of the top public universities in America. It also offers an increasingly attractive bargain: undergraduate tuition and fees are only $6,380 this academic year for in-state students.
Ben Sasse, a former Republican senator who became uf’s president in February 2023, says that producing graduates who can thrive in a disruptive jobs market is at the heart of his mission. He still believes a fundamental part of this ought to be learning about the liberal arts. But, says Mr Sasse, who earned a doctorate in history at Yale, humanities faculties at most universities are not “sure what their purpose is right now”. A core curriculum is “incredibly important for an educated citizenry, but you have to be making a case that you’re speaking to things that are big and broad and meaningful and enduring.” He argues that this isn’t a right-wing project but a classically liberal one. And at the heart of it is uf’s new Hamilton Centre.
Authorised by the Florida legislature in 2022, the centre is a $30m wager on the appeal of Western civilisation. Mr Sasse has said that he intends Hamilton to become uf’s 17th college (joining existing ones such as those for business, engineering, law, medicine and pharmacy). Next year it will begin offering two majors: philosophy, politics, economics and law; and great books and ideas.
Will Inboden, Hamilton’s director, wants uf to have America’s top programme in Western civilisation. The centre already employs a dozen faculty members in a cramped space on uf’s sprawling campus, dominated by the Florida Gators’ football stadium. It is hiring dozens more and eventually will move to its own building. Mr Imboden says part of the strategy is to seek out faculty in fields neglected by modern humanities departments, such as military and diplomatic history. He also favours public-facing academics.
Sunshine statement
Mr Inboden and Mr Sasse, who attended graduate school at Yale together, both served in the administration of George W. Bush. But Mr Inboden argues that the Hamilton Centre is a “pre-political” project. “Students are pretty leery of being indoctrinated,” he says. “The answer to progressive indoctrination on campuses is not conservative counter-indoctrination.”
Jill Ingram, Hamilton’s director of undergraduate students, echoes the desire to avoid a reputation of being a politicised entity. “We’re interested in giving students the tools and the practice to think for themselves, but also to bring back an appreciation for the texts and the ideas that were involved in the founding of America.”
The centre has received a mixed reception on campus. One student recalls telling an adviser that she planned to apply for a fellowship through the centre: “She was, like, ‘Don’t apply for that. It’s a bunch of right-wing storm troopers.’” Yet many who take classes from Hamilton faculty aren’t even aware the centre exists as its own entity. Students associated with it come from a variety of political backgrounds.
Florida is not alone. Other states with new schools focusing on civic thought include Arizona, North Carolina, Tennessee and Texas. A Republican state legislature funded Arizona State University’s School of Civic and Economic Thought and Leadership. When a Democrat, Katie Hobbs, became governor in 2023, it seemed its days might be numbered: Ms Hobbs labelled the school “libertarian” and proposed reallocating the funding. After some debate, however, Democrats backed down.
Places like the Hamilton Centre will face two related challenges. Finding faculty for a growing number of institutions could become harder in the years ahead. Harder still will be to avoid becoming conservative ghettos within their universities.
Ray Rodrigues, the chancellor of the State University System of Florida, says the goal is to offer better general-education courses to all. He and his colleagues also aspire to create scholars who will influence new generations: “If, at the end of the day, what we’re doing is merely trading conservative scholars from one institution to another, then we have failed.”■
Middle East and Africa | Death threats
Congo brings back the death penalty
And it is cracking down on government critics
Trouble in the eastphotograph: getty images
Apr 11th 2024|kinshasa
Critics of congo’s government are on edge—and for good reason. Last month the justice ministry said it was bringing back the death penalty, ending a moratorium that had been in place since 2003, in order to “rid our country’s army of traitors” and to “stem the resurgence of acts of terrorism and urban banditry”.
Restoring capital punishment is, in part, a reaction to the desperate situation in eastern Congo, where the M23 rebel group has surrounded the city of Goma. The conflict with M23, which is backed by Rwanda, has forced more than a million people from their homes, most of whom now live in squalid conditions crammed around Goma. Congo’s army is on the back foot. “We don’t have a choice,” says Patrick Muyaya, a government spokesman, referring to the death penalty.
Human-rights activists and the Catholic church have protested, pointing out that the justice system is dysfunctional. Even Congo’s president, Félix Tshisekedi, describes the court system as “ill”. Moreover, the government seems to use a rather expansive definition of treason and has recently been arresting critics of even the mildest sort. “The immediate effect [of the death penalty] is fear,” says Fred Bauma, the director of Ebuteli, a Congolese think-tank. In February, secret-service agents arrested Mr Bauma and, he says, assaulted him in detention.
Other incidents have also had a chilling effect. Last year the bloodied body of Chérubin Okende, a politician who was close to the opposition leader Moïse Katumbi, was found in his car in Kinshasa. Opposition parties said he had last been seen alive outside the Constitutional Court, when he had sent in his bodyguard to drop off some papers. When the guard returned both Okende and his car were gone. After a lengthy investigation, officials provoked derision by ruling that the death was a suicide. “Chérubin didn’t get justice because the justice system is rotten,” said Georges Oyema, a relative.
But Congo’s judiciary does not take criticism well and it is willing to pursue those who question the official ruling. One of Congo’s best-known journalists, Stanis Bujakera, was sentenced to six months in prison on charges of spreading fake news about Okende’s death. His employer, Jeune Afrique, had published an article without a byline that suggested that Congolese military-intelligence agents had killed Okende, based on a leaked intelligence memo. The government denied the memo’s authenticity, saying it had been forged by Mr Bujakera.
Pressure on government opponents had been on the rise before the general and presidential elections in December. But it has intensified since Mr Tshisekedi was proclaimed the winner. According to Mr Bauma, the think-tank director, the president is getting jittery about a loss of public support. The military successes in the east that he promised in his campaign have not materialised. A diplomatic solution to the conflict seems far off. “There’s a desire to silence critics,” says Mr Bauma. ■
The Americas | The great green rivalry
Chinese green technologies are pouring into Latin America
That is prompting anxiety in the United States about security, coercion and competition
photograph: getty images
Apr 10th 2024|montevideo
From the snazzy seats of the e14 bus in Montevideo, Uruguay’s capital, it is hard to tell that the smooth electric machine is Chinese. Only an eagle-eyed commuter would spot the tiny window sticker bearing the name of byd, a Chinese manufacturer. Enquiries as to passengers’ concerns about the bus’s Chinese origins elicit bafflement. They are a vast improvement on the deafening gas-guzzlers they replaced. The operator has just ordered 200 more. Thousands of similar buses glide through other Latin cities. But politicians in the United States fret that Latin America’s growing reliance on Chinese green technology, from electric buses to solar panels, is a problem and even a threat.
Tensions are rising because the stakes are high. The fast adoption of green technologies such as electric vehicles (evs), solar panels and batteries is a vital pillar of efforts to halt climate change. These technologies are also an economic smash hit. In 2022 announced foreign direct investment in renewable energy globally totalled over $350bn, dramatically more than annual investments in any other sector not only that year but in decades. That has made green technology the latest front in the United States’ rivalry with China.
Latin America plays an outsize role in this. A world-leading 60% of electricity in the region comes from renewable sources. It boasts a wealth of the critical minerals needed to make green technologies, and is rich enough to be a serious market for them. China so dominates global production of solar panels, batteries and wind turbines that leaders in the United States fear they are losing the green-technology race, both globally and in their backyard. Other developing countries that are trying to go green while balancing Sino-us tensions should be paying attention.
chart: the economist
China is focused on what it calls the “new three”: evs, lithium-ion batteries and solar panels. In 2021 its exports of these products to Latin America already totalled $5bn. They have since almost doubled (see chart 1). Brazil dominates overall, but exports to the wider region are growing even faster. “China’s importance to our market is immense,” says Rodrigo Sauaia of the Brazilian Association of Photovoltaic Energy, an industry body.
Some 99% of the solar panels imported to Latin America last year were made in China. That is even more than would be suggested by China’s dominant position in solar, where it has 80% of global manufacturing capacity; in wind, that figure is more than 60%. There are more Chinese buses on the streets of Santiago, the capital of Chile, than in any other city outside China. Last year about 70% of evs imported to Latin America were Chinese. And over 90% of the lithium-ion batteries imported to South America were, too.
chart: the economist
China’s direct investment in green technology and construction on the continent is surging. Its energy investments suddenly switched to renewables in 2015, according to data crunched by Margaret Myers of the Inter-American Dialogue, a think-tank in Washington (see chart 2). It has ramped up its interest in electricity distribution and transmission. Utility deals worth $17bn accounted for about 75% of Chinese mergers and acquisitions in the past five years in Latin America. State Grid, a state-owned Chinese utility, has bought two of Chile’s largest electricity distributors and serves about half of the country’s market. After a series of acquisitions in Peru, state-owned Chinese companies are set to control the distribution of all electricity in Lima, the capital.
Other green sectors are attracting investment, too. In 2022 Chinese firms invested $2.2bn in the ev industry, 35% of total Chinese fdi in Latin America that year. The bulk of this was in ev- and battery-manufacturing in Brazil, Mexico and Argentina. In Brazil byd has taken over a former Ford factory in the east. (The symbolism is not lost on bigwigs in Washington.) It will be byd’s biggest hub outside Asia, initially producing 150,000 vehicles a year, with the potential to increase that to 300,000. In Mexico byd is planning a factory of a similar size.
Many in Latin America see this as good news. Chinese solar panels and evs are cheap and effective. Any jumpiness about surging imports is balanced by hopes that Chinese investment will lead to more green gear being manufactured locally, boosting jobs and growth. In solar panels that seems doubtful. China is so dominant and the panels so standardised that production will probably stay in China.
Processing lithium for batteries looks more likely. When in China last year, Gabriel Boric, Chile’s president, announced that Tsingshan, a Chinese metals-processing firm, would invest $233m in a Chilean plant to produce lithium iron phosphate, a compound used to make cheaper batteries. “The most important thing”, he said, is that “we will be creating value chains and transferring knowledge.” Local wind-turbine manufacturing also looks plausible.
Juicing the joules
The greatest potential for local green manufacturing is in evs, which Brazil is trying to hasten by raising tariffs on imports. byd’s plan to produce 150,000 evs a year in Brazil is a big bet, equivalent to over half of the company’s global exports in 2023 and far more than the 18,000 byd vehicles that Brazil imported that year. But Brazil is a big market, with 2.3m new vehicles registered in 2023. Only 2.5% of those were electric, but that was twice the 2022 figure. That neighbouring Latin American countries are also electrifying their fleets adds to the opportunity.
Evan Ellis of the us Army War College says the stand-off over green technology is a “civilisational struggle”. For the United States that comprises a trio of worries. The first is that Chinese green technology could pose a security threat, to the United States and others. President Joe Biden recently ordered a national-security probe into the risks posed by Chinese green technologies and warned that Chinese evs could be “remotely accessed and/or disabled”. One fear is that they could collect data on sensitive military sites. A more extreme one is that remote access could potentially turn them into weapons.
Such a grim scenario is far-fetched, especially in Latin America. Even if such meddling were technically possible, which is far from clear, any attempt or threat to weaponise evs would do great damage to China’s global car industry. The threat from solar panels or wind farms is even more limited. Solar panels themselves are “dumb”, and do not send data anywhere by default. For connected parts like inverters, though Chinese firms do dominate, there are many other options on the market.
Security does matter to Latin leaders, but in a different sense. “The push for cleaner energy is also a matter of national security,” says Diego Pardow, Chile’s energy minister. Diversified energy partners are important, he agrees. But even if plenty of Chile’s green technology comes from China, slashing reliance on imported gas and oil using Chile’s wind and sun reduces national-security risks because it cuts Chile’s exposure to strife in the Middle East or Ukraine, he explains.
The United States’ second fear is that Latin reliance on Chinese green technology gives China political leverage that it could use to exert pressure on anything from Taiwan to exclusive mining deals. Yet solar panels and wind turbines provide little ongoing leverage once they’re installed. Besides, Latin America boasts some 60% of global lithium resources, a handy green bargaining chip of its own. Leverage can also come from any economic ties, and the United States and Europe are far larger investors in Latin America overall than China. Though China may be moving the fastest on green technology, Europe and the United States are active, too. The biggest renewables project announced in Latin America in 2022 was an aviation-biofuels plant in Panama, which is being built by a firm from the United States. Europe, meanwhile, is hoping for a large role in green hydrogen. For Latin America as a whole, the United States is still the largest trading partner.
Some concerns about political pressure are more reasonable. Chinese ownership of large shares of critical infrastructure, such as electricity-distribution grids in Peru and Chile, is more worrying because the flow of electrons through wires is something that the operating company can easily disrupt. Unlike Europe and the United States, many Latin American countries lack an institution to assess foreign investments on strategic or national-security grounds. Still, says Mr Pardow, most of Chile’s distribution grid used to be owned by one Spanish firm. “We are more diversified than we used to be,” he notes.
Green-tech FOMO
Uncle Sam’s last worry is that firms and workers in Latin America and the United States are losing out to Chinese ones in the world-shaping green-technology industry, thanks to heavy state support in China. In March Janet Yellen, the us treasury secretary, said that Chinese overcapacity in green technologies “hurts American firms and workers, as well as firms and workers around the world”. Officials in Washington fret that a flood of Chinese goods will lead to deindustrialisation not just in Latin America but in every country which remains open to Chinese green-technology imports. The existence of China’s green-technology fdi is evidence against this. At any rate, there are few good Western alternatives to China’s “new three”. If fdi keeps expanding, and local production comes to rival Chinese imports, anxiety about Latin deindustrialisation should ease.
The United States’ concerns about its weakness in green technologies will remain, though. They are understandable, but until its firms can reliably provide cheap, effective and large-scale alternatives to Chinese offerings, urging caution on Latin American leaders will do little good. “Alerting about risks without putting an alternative on paper is not useful at all,” says Thiago de Aragão of Arko Advice, a Brazilian political consultancy. Instead, he says, “it creates antipathy.” ■
Europe | Charlemagne
What happens if Ukraine loses?
Russian victory would be debilitating for the West, and especially for Europe
photograph: peter schrank
Apr 11th 2024
To ask “what if Ukraine loses?” was once a tactic favoured by those looking to berate its Western allies into sending more money and weapons. Increasingly the question feels less like a thought experiment and more like the first stage of contingency planning. After a gruelling few months on the battlefield, gone are last year’s hopes of a Ukrainian counter-offensive that would push Russia back to its borders and humble Vladimir Putin. These days it is fear that dominates: that an existing stalemate might crumble in favour of the invader, or of Donald Trump coming back to power in America and delivering victory to Russia on a silver platter. Although a vanquished Ukraine has become a less far-fetched prospect, it is no less frightening. Sobering as the return of war on the continent has been, a successful invasion reaping geopolitical rewards for Mr Putin would be much worse.
A defeat of Ukraine would be a humbling episode for the West, a modern Suez moment. Having provided moral, military and financial succour to its ally for two years now, America and Europe have—perhaps inadvertently—put their own credibility on the line. That they have sometimes dithered in delivering this support would make things worse, not better: further confirmation, among sceptics of liberal polities, that democracies lack what it takes to stand up for their interests. In Russia but also China, India and across the global south, Ukraine’s backers would be dismissed as good at tabling un resolutions and haggling over wording at eu and nato summits but not much else. The colouring by atlas-makers of Ukrainian land into Russian territory would cement the idea that might makes right, to the benefit of strongmen far and wide. George Robertson, a former boss of nato, has warned that “If Ukraine loses, our enemies will decide the world order.” Unfortunately for the Taiwanese, among others, he is probably right.
Read more of our recent coverage of the Ukraine war.
Nowhere would feel the brunt of this humiliation more than the eu, the pinnacle of liberal international norm-setting. Ukraine’s neighbours moved less fast than America in providing support. But in the European slow-but-steady way they feel they have done as much as could be asked of them. By sending arms (including using eu money to pay for weapons, a first), propping up Ukraine’s finances, taking in millions of refugees, applying a dozen rounds of sanctions against Russia and weaning themselves off its piped gas, the bloc’s politicians have pushed out the boundaries of what initially seemed possible. If it proves not to have been enough, plenty will ask whether the union at its core is fit for purpose. Populists—and Putin fans—in the mould of Hungary’s Viktor Orban or Marine Le Pen in France will crow that theirs is the best way. Currently there are divisions between the hawkish eastern fringe and others in the bloc. If Ukraine loses, those will metastasise into recriminations and bitterness. Emmanuel Macron in France, a newly minted hawk, has set the tone by warning of “cowards” holding Europe back.
The geopolitical fallout of a Ukrainian defeat would depend on the shape of any peace settlement. This in turn would hinge on military dynamics or the mindset of Mr Trump, should he be elected again. If Ukraine’s ammunition-constrained army crumbles and somehow Russia controls not just its eastern territories but the whole country, perhaps under a Belarus-style puppet regime, its aggressor will in effect share over a thousand more kilometres of borders with the eu. Should defeat be more limited—including annexation of territory, but a still-functioning “rump” Ukraine—nerves would still be set jangling. How long would it be before Mr Putin finished the job? Millions more Ukrainians might seize the opportunity to leave. The future shape of the eu would change: the promise of enlargement to Ukraine presupposed a comprehensive victory. The western Balkans, whose own bid to join was revived by the war, would surely be left in limbo too.
Beyond the feeling of culpability and shame, a sense of fear would pervade Europe. Might there be a further attack? Would it be on a nato country, forcing allies into action? Further attempts at conquest would at least be a possibility. Mr Putin has alluded to Nazism in the Baltics, echoing the pretext he used to invade Ukraine; the trio also have a large Russian-speaking population. A year ago the joke was that Russia’s claim of having the best army in Europe was ludicrous: it didn’t even have the best army in Ukraine. Fewer think that today, given Russia’s ability to keep supplying its men—not to mention supplying more men—faster than its adversary. A victorious Russian army would leave Mr Putin commanding the only fighting force with the battle-hardening and 21st-century warfare skills to take territory; if he controlled the Ukrainian state he would control two such military machines. Against him stand war-shy Europeans, perhaps with flaky American backing and depleted armouries. Might Poland or Germany find they will need their own nuclear deterrent?
War hoarse
Even if Ukraine wins, Europe will have to change. The “peace project” at its core will have to adjust to a world in which war is, if not likely, then at least possible. nato celebrates its 75th birthday this month, but its future as an alliance that Europeans use to ensure that America guarantees their territorial integrity is uncertain. Decades of reaping the post-cold-war peace dividend will have to be followed by higher defence budgets, as has started happening.
But if Russia emerges even semi-victorious, change will be imposed upon Europe in far more unpleasant and unpredictable ways. Seeking an arrangement with Mr Putin that would reward his belligerence with control over bits of Ukraine if he promised not to wage more war will provide illusory security, if that. Europe’s answer to the question “what if Ukraine loses?” remains simple: “It must not.” ■
Business | Bartleby
Productivity gurus through time: a match-up
James Clear v Arnold Bennett
photograph: paul blow
Apr 11th 2024
The most-read non-fiction book in America, measured by views on Kindle and listens on Audible, an audio-book service, is “Atomic Habits” by James Clear. Published in 2018, it has now been on the bestseller list for 277 weeks. Mr Clear’s book, which pulls off the impressive trick of being both ludicrous and helpful, argues that small changes of routine can compound into big improvements, whether your goal is to be more productive at work, to eat more healthily or to develop new skills.
A manual on time management and self-improvement might sound modern. But these were also the themes of a bestseller from the early years of the 20th century. “How to Live on 24 Hours a Day”, first published in 1908, is a short self-help book written by Arnold Bennett, a prolific English writer. Bennett’s book was meant to salve the “feeling that you are every day leaving undone something which you would like to do, and which, indeed, you are always hoping to do when you have ‘more time’”. He wrote, in other words, for the same aspirational market as Mr Clear does today. (Another of today’s productivity Yodas, Cal Newport, cites Bennett in “Deep Work”, a book on how to focus.)
Comparing Bennett’s book with Mr Clear’s yields instructive likenesses and dissimilarities. One obvious difference is tone. Bennett is wry about human foibles. If you think that “ingeniously planning out a timetable with a pen on a piece of paper” will be enough to solve your problems, he writes, then “lie down again and resume the uneasy doze which you call your existence.” He warns against fetishising a programme of self-improvement, lest “one may come to exist as in a prison and one’s life may cease to be one’s own.”
Mr Clear is more earnest. He clothes his advice in capital letters: the Plateau of Latent Potential, the Four Laws of Behaviour Change. He thinks in terms of winners and losers. He says truly bizarre things like: “If you can get 1% better each day for one year you’ll end up 37 times better by the time you’re done. Conversely, if you get 1% worse each day for one year you’ll decline nearly down to zero.” This is known as the Misuse of Mathematics.
The two are separated by social and technological gulfs, too. Bennett’s world is one in which women stay at home, tea is made by servants and people entertain themselves by playing cards and “pottering”. He tells readers who enjoy nature to go to the nearest gas lamp with a butterfly net. In Mr Clear’s world, people spend hours working on their biceps at the gym, make time to be grateful and stop themselves from watching too much tv by taking batteries out of the remote.
Perhaps the biggest point of difference concerns work itself. Bennett’s audience was the new army of white-collar types taking the train in and out of work each day. He presupposed that the time they spent in the office was unfulfilling. A majority puts “as little of themselves as they conscientiously can into the earning of a livelihood”, he wrote. Work was an eight-hour sentence bordered at each end by a commute. As a result, Bennett’s tips focus exclusively on the other 16 hours of the day. These were the times when people could carve out the space to develop an expertise in anything from music to architecture.
Mr Clear makes the modern assumption that work is as likely to provide purpose and identity as other parts of your life. And it leaves no obvious ocean of time to fill—his tips are about optimising already-busy days by weaving new routines into them. He is a proponent of “stacking habits” so that one ritual follows another: after a morning cup of coffee, for example, meditate for a minute. Bennett thinks in terms of hours, Mr Clear in terms of seconds.
If the differences between the two mavens are great, the similarities are striking. Both authors espouse the importance of discipline, ritual and habit in managing time more productively. Both stress the need to start small when developing new routines; Mr Clear gets out his capitals again and calls this the
Two-Minute Rule.
Above all, it is plain that humans are largely and exasperatingly unchanged. At one point Bennett writes about the difficulty of sustaining concentration in a way that is shamefully recognisable to modern readers: “You will have not gone ten yards before your mind has skipped away under your very eyes and is larking around the corner with another subject.” Unless humanity itself gets an upgrade, the market for a 22nd-century version of Bennett and Mr Clear is assured. ■
Business | Schumpeter
Generative AI has a clean-energy problem
What happens when the AI revolution meets the energy transition
photograph: mari fouz
Apr 11th 2024
When a colleague from this newspaper visited Sam Altman in 2022 at his home in San Francisco, he noticed two pairs of pink high-tops on a bookshelf. One had the logo of Mr Altman’s machine-learning startup, Openai. The other bore an emblem for Helion, a nuclear-fusion company that Mr Altman also backs. The entrepreneur is obsessed with both technologies—not just as foot fashion. He believes that the cost of intelligence and the cost of energy will fall in a mutually sustainable way. He calls it a “long and beautiful exponential curve”.
Nasty, brutish and short, more like. Talk to utilities and data-centre operators and, though many share Mr Altman’s excitement about artificial intelligence (ai), they are grappling with an energy conundrum on which the future of three big economic shifts partly hinges: the ai revolution; the efforts to electrify swathes of the economy; and the fight against climate change. In a nutshell, “generative” ai, the sort behind Openai’s Chatgpt, has a ravenous appetite for electricity. It has landed, virtually out of the blue, on a global energy system that is already struggling to cope with alternative sources of power demand. As yet it is not clear whether there will be enough clean energy to meet everyone’s needs.
At first glance, the solution looks simple. Data centres, such as those that companies like Alphabet, Amazon and Microsoft use to supply cloud-computing services, have over the past decade or so accounted for only 1-2% of global energy demand. For years the big-tech “hyperscalers” have harvested ever greater energy efficiencies from their server farms, even as the world’s computing workloads have soared. Moreover, they have invested heavily in clean energy to offset their carbon footprints. In America, electricity providers to the hyperscalers are only too keen to help. They have endured two decades of anaemic electricity demand and are desperate for new sources of growth. In recent earnings calls their bosses have promised tens of billions of dollars in investment over the next five years to pump more power to data centres. Last month one such firm, Talen Energy, sold Amazon a nuclear-powered data centre for $650m. So far, so promising.
Generative ai changes the nature of the game, though. Since the days when they were the workhorses of the cryptocurrency boom, graphics-processing units (gpus), the chips on which models like Chatgpt are trained and run, have been energy addicts. According to Christopher Wellise of Equinix, which rents out data centres, a pre-ai hyperscale server rack uses 10-15 kilowatts (kw) of power. An ai one uses 40-60kw. It is not just computation that gobbles up electricity. Keeping the racks of gpus cool requires just as much oomph. Moreover, a lot of ai-related energy demand in the past year or so has come from trainers of “foundation” models like gpt-4, Openai’s latest offering. Widespread use of these as tools—for research, to make videos, to dress the Pope in Balenciaga—could put more strain on the grid. A search by Chatgpt may consume ten times the electricity of googling.
It is early days in the generative-ai boom, so it is too soon to make hard and fast predictions. But informed guesses about the related rise in energy demand are striking. At the top of its range, the International Energy Agency, a global forecaster, says that by 2026 data centres could use twice as much energy as two years ago—and as much as Japan consumes today. It expects data centres to account for a third of new electricity demand in America over the next two years. Rene Haas, chief executive of Arm, a chip-design company, told the Wall Street Journal this week that by the end of the decade ai data centres could consume as much as a quarter of all American electricity, up from 4% or less today.
In America, two things further compound the complexities. The first is timing. The rise of generative ai coincides with a booming economy, with power consumption to match. Many power consumers want their energy to be zero-carbon, creating competition for a scarce resource. So do buyers of electric vehicles (evs), the rise of which may have slowed but has not stopped. The second is the challenge of expanding the grid. Despite support from the White House, it is not easy for utilities to build new renewable capacity quickly. They suffer from supply-chain problems; by some accounts it takes three years to deliver a transformer, up from less than a year previously. Interest rates have pushed up the cost of wind and solar projects, making them harder to fund. Building new transmission lines is fiendishly tough.
No doubt there will be creative thinking. The obvious solution is to make gpus more energy-efficient. Nvidia, their biggest supplier, says it has already achieved this with its latest generation of ai servers. More efficient chips can, however, simply stimulate more usage. Another option, says Aaron Denman of Bain, a consultancy, is for the hyperscalers to use their deep pockets to help utilities overcome some of the grid constraints. He says that the real crunch may occur during certain parts of the year, such as unusually hot summer days when Americans switch on their air-conditioners. That means having small power plants on standby. The likelihood, though, is that these will be fuelled by natural gas, undermining the cloud providers’ climate commitments.
The nuclear option
If shortages of renewable energy occur, it will come at a cost. No one knows yet how generative ai will make money. What people do know is that the cost of acquiring gpus is rocketing. If the energy costs of running them soar, too, it could put the brakes on expansion. In addition, the electrification of the rest of the economy is highly cost-dependent; an ai v ev scramble for clean power would push up prices and serve neither industry well. By all means keep your fingers crossed for Mr Altman’s rose-tinted fusion dream to become reality. But don’t count on it. ■
Finance and economics | Buttonwood
What China’s central bank and Costco shoppers have in common
Hint: it is not a fondness for cryptocurrencies
illustration: satoshi kambayashi
Apr 11th 2024
Gold has always held an allure. The earliest civilisations used it for jewellery; the first forms of money were forged from it. For centuries kings clamoured to get their hands on the stuff. Charlemagne conquered much of Europe after plundering vast amounts of gold from the Avars. When King Ferdinand of Spain sent explorers to the new world in 1511, he told them to “get gold, humanely if you can, but all hazards, get gold.” Ordinary men also clamoured for it after James Marshall, a labourer, found a flake of gold while constructing a saw mill in Sacramento, California, in 1848.
People are once again spending big on the precious metal. On April 9th its spot price hit a record of $2,364 an ounce, having risen by 15% since the start of March. That gold is surging makes a certain degree of sense: the metal is seen to be a hedge against calamity and economic hardship. It tends to rally when countries are at war, economies are uncertain and inflation is rampant.
But only a certain degree. After all, why is it surging precisely now? Inflation was worse a year ago. The Ukraine war has arrived at something of a stalemate. In the month after Hamas’s attack on Israel on October 7th, the price of gold rose by just 7%—half the size of its more recent rally. Moreover, investors had only recently appeared to have gone off the stuff. Those who thought gold would act as a hedge against inflation were proven sorely wrong in 2022 when prices slipped even as inflation spiralled out of control. Cryptocurrencies like bitcoin—often viewed as a substitute for gold—have gained popularity. Longtime gold analysts are puzzled by its ascent.
An investor who cannot understand a rally on the basis of fundamentals must often consider a simpler rationale: there have been more eager buyers than sellers. So, who is buying gold in bulk?
Whoever it is, they are not using exchange-traded funds, or etfs, the tool most often used by regular folk through their brokerage accounts, as well as by some institutional investors. There have, in fact, been net outflows from gold etfs for more than a year. After tracking each other closely throughout 2020 and 2021, gold prices and etf inflows decoupled at the end of 2022. Although prices are up by around 50% since late 2022, gold held by etfs has dropped by a fifth.
That leaves three buyers. The first, and biggest, are central banks. In general, central bankers have been increasing the share of reserves that are stored in gold—part of an effort to diversify away from dollars, a move that gathered pace after America froze Russia’s foreign-exchange reserves in response to its invasion of Ukraine. Nowhere is this shift clearer than in China, which has raised the share of its reserves held in gold from 3.3% at the end of 2021 to 4.3%. Trading has picked up in the so-called over-the-counter market, in which central banks buy much of their gold. China’s central bank added 160,000 ounces of gold, worth $384m, in March.
The second is big institutions, such as pension or mutual funds, which may have been making speculative bets or hedges on gold—in case inflation does come back or as protection against future calamities. Activity in options and futures markets, where they tend to do most of their trading, is elevated.
The third potential buyer is the most intriguing: perhaps private individuals or companies are buying physical gold. In August it became possible to buy hunks of the metal at Costco, an American superstore beloved by the cost-conscious middle classes for selling jumbo-size packs of toilet paper, fluffy athletic socks and rotisserie chickens, all at super-low prices. The retailer started selling single-ounce bars of gold, mostly online, for around $2,000—just a hair higher than the spot value of bullion at the time. It sold out almost immediately, and continues to do so whenever it restocks. Analysts at Wells Fargo, a bank, estimate that shoppers are buying $100m-200m worth of gold each month from the superstore, alongside their sheet cakes and detergent.
That would be 40,000 to 80,000 ounces of gold each month; or, in other words, up to half as much as the Chinese central bank. Such behaviour is perhaps a harbinger of a trend. Inflation in America is creeping up again. It has overshot expectations for three consecutive months, and would reach 4% in 2024 if current trends were to continue. Medium-term expectations, which had dropped, have begun climbing. As shoppers peruse Costco’s wares, worrying about the cost of living, it is it any wonder they are tempted by a bit of bullion?■
Finance and economics | Free exchange
What will humans do if technology solves everything?
Welcome to a high-tech utopia
illustration: álvaro bernis
Apr 9th 2024
In “permutation city”, a novel by Greg Egan, the character Peer, having achieved immortality within a virtual reality over which he has total control, finds himself terribly bored. So he engineers himself to have new passions. One moment he is pushing the boundaries of higher mathematics; the next he is writing operas. “He’d even been interested in the Elysians [the afterlife], once. No longer. He preferred to think about table legs.” Peer’s fickleness relates to a deeper point. When technology has solved humanity’s deepest problems, what is left to do?
That is one question considered in a new publication by Nick Bostrom, a philosopher at the University of Oxford, whose last book argued that humanity faced a one-in-six chance of being wiped out in the next 100 years, perhaps owing to the development of dangerous forms of artificial intelligence (ai). In Mr Bostrom’s latest book, “Deep Utopia”, he considers a rather different outcome. What happens if ai goes extraordinarily well? Under one scenario Mr Bostrom contemplates, the technology progresses to the point at which it can do all economically valuable work at near-zero cost. Under a yet more radical scenario, even tasks that you might think would be reserved for humans, such as parenting, can be done better by ai. This may sound more dystopian than utopian, but Mr Bostrom argues otherwise.
Start with the first scenario, which Mr Bostrom labels a “post-scarcity” utopia. In such a world, the need for work would be reduced. Almost a century ago John Maynard Keynes wrote an essay entitled “Economic Possibilities for Our Grandchildren”, which predicted that 100 years into the future his wealthy descendants would need to work for only 15 hours a week. This has not quite come to pass, but working time has fallen greatly. In the rich world average weekly working hours have dropped from more than 60 in the late 19th century to fewer than 40 today. The typical American spends a third of their waking hours on leisure activities and sports. In the future, they may wish to spend their time on things beyond humanity’s current conception. As Mr Bostrom writes, when aided by powerful tech, “the space of possible-for-us experiences extends far beyond those that are accessible to us with our present unoptimised brains.”
Yet Mr Bostrom’s label of a “post-scarcity” utopia might be slightly misleading: the economic explosion caused by superintelligence would still be limited by physical resources, most notably land. Although space exploration may hugely increase the building space available, it will not make it infinite. There are also intermediate worlds where humans develop powerful new forms of intelligence, but do not become space-faring. In such worlds, wealth may be fantastic, but lots of it could be absorbed by housing—much as is the case in rich countries today.
“Positional goods”, which boost the status of their owners, are also still likely to exist and are, by their nature, scarce. Even if ais surpass humans in art, intellect, music and sport, humans will probably continue to derive value from surpassing their fellow humans, for example by having tickets to the hottest events. In 1977 Fred Hirsch, an economist, argued in “The Social Limits to Growth” that, as wealth increases, a greater fraction of human desire consists of positional goods. Time spent competing goes up, the price of such goods increases and so their share of gdp rises. This pattern may continue in an ai utopia.
Mr Bostrom notes some types of competition are a failure of co-ordination: if everyone agrees to stop competing, they would have time for other, better things, which could further boost growth. Yet some types of competition, such as sport, have intrinsic value, and are worth preserving. (Humans may also have nothing better to do.) Interest in chess has grown since ibm’s Deep Blue first defeated Garry Kasparov, then world champion, in 1997. An entire industry has emerged around e-sports, where computers can comfortably defeat humans. Their revenues are expected to grow at a 20% annual rate over the next decade, reaching nearly $11bn by 2032. Several groups in society today give us a sense of how future humans might spend their time. Aristocrats and bohemians enjoy the arts. Monastics live within themselves. Athletes spend their lives on sport. The retired dabble in all these pursuits.
Everyone’s early retirement
Won’t tasks such as parenting remain the refuge of humans? Mr Bostrom is not so sure. He argues that beyond the post-scarcity world lies a “post-instrumental” one, in which ais would become superhuman at child care, too. Keynes himself wrote that “there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy…To judge from the behaviour and the achievements of the wealthy classes today in any quarter of the world, the outlook is very depressing!” The Bible puts it more succinctly: “idle hands are the devil’s workshop.”
These dynamics suggest a “paradox of progress”. Although most humans want a better world, if tech becomes too advanced, they may lose purpose. Mr Bostrom argues that most people would still enjoy activities that have intrinsic value, such as eating tasty food. Utopians, believing life had become too easy, might decide to challenge themselves, perhaps by colonising a new planet to try to re-engineer civilisation from scratch. At some point, however, even such adventures might cease to feel worthwhile. It is an open question how long humans would be happy hopping between passions, as Peer does in “Permutation City”. Economists have long believed that humans have “unlimited wants and desires”, suggesting there are endless variations on things people would like to consume. With the arrival of an ai utopia, this would be put to the test. Quite a lot would ride on the result. ■
Obituary | The militant debutante
Rose Dugdale went from debutante to IRA bombmaker
The heiress and IRA militant died on March 18th, aged 82
photograph: alamy
Apr 10th 2024
Her hair was curled. Her skin was powdered. Her white organdie gown had been tailor-made by the House of Worth. Her gloves, as all debutantes’ must, reached to the elbow. Her posture was from Miss Ironside’s School for Girls in Kensington (“Shoulders back! Stand up straight! Speak clearly!”). Rose Dugdale—heiress, debutante, beauty—was very well put together.
Her bombs would be well put together too. Take the ones she dropped from the helicopter she helped hijack in Northern Ireland. They had a milk churn for the main casing. A core of gelignite. Fertiliser around that. Wire round the top to keep it all in. She worked with ingenuity and care—and food would be a feature of her diy destruction: she would later use packets of digestive biscuits to dampen the recoil on grenade launchers. That, the police thought, was clever. You had to understand physics to do that.
But then Rose was clever. And for a time—after the ball gowns but before the bombs—she had excelled. She’d only agreed to that gown so that her parents would let her apply to Oxford. Soon, she was studying philosophy, politics and economics there. Later, she would specialise in philosophy and in Wittgensteinian “simples”: categories of objects that were one single, simple thing. Though little was simple about Rose: debutante-terrorist; heiress-thief; oxymoron incarnate. Her father would blame that education. “Never”, he warned, “send your daughter to Oxford.”
He certainly had not meant to. Rose had been born into that English class for whom ignorance was less an accidental state than an ideal. At Miss Ironside’s School for Girls, mistresses instructed the girls less in science than in sitting up straight: getting the right answer mattered far less than getting “Mr Right”. At home, Rose was expected to dress for dinner, curtsy to guests and hunt both deer and a husband. And above all she had to do “the season”, that “upper-class version of a puberty rite” as the writer Jessica Mitford called it, when four hundred girls in pearls curtsied before the queen. Or, as Princess Margaret put it, when “every tart in London” did. Rose was repelled: it was no more than a pornographic marriage market.
Oxford, by contrast, had felt so modern. Her female tutor, Peter Ady, particularly so. Peter had breeches, Burmese ancestry, dark eyes, a boy’s name (her mother had hoped for a son) and a habit of passionately kissing other women on the mouth. Students had watched, fascinated, as Peter stalked up to the philosopher Iris Murdoch and kissed her on the lips. A little later, as Sean O’Driscoll records in his biography, Rose had kissed Peter too. Peter had responded and soon they were in bed. After, Rose lay on Peter and Peter stroked her hair. They weren’t lesbians, Rose thought, or trying to be feminist fundamentalists or anything. They were just trying to be in love.
And for a time she was. With Peter, and with social change. Later, after Rose had been arrested—first for burgling her father’s house, then for stealing art from another one, and for that hijacking—people would wonder why an Oxford-educated deb had turned to terrorism. It was the wrong question: she was not a rebel despite her advantages but because of them. Oxford had liberated her from her sex and class. There, she had stopped curtsying and started to wear men’s shirts. She and a friend had even disguised themselves as men (wigs, glasses, grunting) to crash the all-male Oxford Union. Though her liberation was not total: when the bbc came to interview her about it, Rose meekly made them tea.
Still, the revolution was coming. And when Bloody Sunday happened in 1972, and 13 civilians were killed by British soldiers, Rose decided to hasten it along. She turned against Britain—the “filthy enemy”—and became a militant. Whereupon her upper-class education suddenly came into its own. All that hunting and shooting was ideal rifle practice for a terrorist. Years of crawling on her belly stalking deer made her the perfect guerrilla fighter. Hadn’t Mao said that political power grew from the barrel of a gun? Well, Rose knew how to wield one. And a stint in a French finishing school turned out to be splendidly handy for an art heist.
On April 26th, 1974, a little after 9.15pm, a car drove up to Russborough House in Ireland. Inside the house were Sir Alfred and Lady Beit and an expensive art collection. Inside the car were three masked men, two ak-47 rifles and Rose, pretending to be a French tourist whose “voiture” had broken down. Within minutes Sir Alfred and Lady Beit had been tied up at gunpoint. Rose walked round the house, telling her men which paintings to steal (still speaking, as Mr O’Driscoll’s book notes, in that accent).
She wanted “Zis one” (a Goya) “and zis one” (a Velázquez) and definitely “zis one” (a Vermeer). The spell at finishing school and youthful trips to the Louvre had given her a discerning eye: “Non! Not zat one!” She didn’t regret the heist: the pictures could be used to ransom ira prisoners and the Beits were capitalist pigs; they deserved it. Besides, the Vermeer was just beautiful. History, she knew, would absolve her.
The legal system was less lenient: after she was caught, she was sentenced to nine years in prison. History would be less forgiving than expected too: Rose would be remembered largely for violence and for failure. That heist merely ended in arrest, while those carefully made milk-churn bombs failed to detonate properly: one bounced off a roof; another splashed harmlessly into a river. A British major said the army had begun assessing an interesting new weapon, the agmic: the “Air-to-Ground Milk-Churn”.
The agmic didn’t catch on. The ira eventually handed over its weapons. But Rose, who was let out of prison in 1980, was unrepentant. Towards the end of her long life she was asked what its best day had been. She thought for a moment and then answered: the day when she had dropped those bombs. That had been the happiest day of her life. ■
|