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[Jul 12th 2025]

The world this week

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The world this week

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The world this week

Politics
7月 10, 2025 07:13 上午

The search and rescue mission continued in central Texas to find

any survivors from flash floods that killed at least 120 people. More
than 170 are missing and the death toll is expected to rise as the
flood waters recede. At least 35 children were killed, including at a
summer camp for girls that was swept away in the deluge. Amid
criticisms about local flood defences, the state’s governor, Greg
Abbott, said that a special session of the legislature would discuss
flood-warning systems and relief for devastated communities, among
other things.

America’s Centres for Disease Control reported that 1,288 cases of

measles have been reported so far this year, which already makes
2025 the worst year for the disease since 1992 (it was declared to

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have been eliminated in the United States in 2000). Almost 30% of
those cases have been in children under the age of five, and another
36% under 19. Ninety-two per cent of all cases are either
unvaccinated or their vaccination status is unknown.

This year’s state-of-the-epidemic report from UNAIDS tried to keep

a stiff upper lip, but is full of woe. The number of deaths and new
infections has continued to fall, and long-acting prophylactic drugs
are now being introduced. But the shut-off in January of American
aid money is causing fears that those trends will go into reverse. A
forthcoming meeting in Kigali will discuss how to react.

The Supreme Court decided that the Trump administration could

proceed with its plan to sack potentially hundreds of thousands of
federal workers, overturning a lower court’s suspension of the
executive order. The Supreme Court did not say whether the order
was legal, however, and it may still be challenged.

Elon Musk announced the formation of the America Party, which he

previously said would primarily challenge Republicans who voted for
Donald Trump’s “big, beautiful” tax-cutting, deficit-raising bill. Mr
Trump described Mr Musk’s idea as “ridiculous” and said he “had
gone off the rails”. Investors in Tesla, Mr Musk’s car company, took
fright, sending its share price down.

Talks continued in Qatar aimed at implementing a ceasefire between

Israel and Hamas in Gaza. The negotiations were given a push by
Mr Trump, who is pressing Israel to reach a deal. Binyamin
Netanyahu, the Israeli prime minister, met Mr Trump at the White
House, his third visit since January. In Gaza, dozens of people have
been killed in Israeli air strikes in recent days.

The Houthi rebels in Yemen, who are backed by Iran, attacked

commercial vessels in the Red Sea for the first time since
December. Two Greek-owned ships were targeted by drones and
missiles. Four crewmen were killed, making it the Houthis’ most

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lethal attack on shipping to date. One ship was en route to Saudi
Arabia, the other to Turkey. Israel responded immediately to the first
attack by carrying out air strikes on Yemeni ports.

At least 31 people were killed in the latest anti-government protests

in Kenya, according to the country’s human-rights commission.
Demonstrators have been angered by allegations of police brutality.
The president, William Ruto, urged police not to use lethal force, and
said they should shoot protesters in the leg instead.

Ever-changing moods

Following a phone call with Volodymyr Zelensky, Donald Trump

promised to send more crucial air-defence weapons to Ukraine, a
week after the Pentagon said it was suspending shipments because
it was running low on stocks. The Ukrainian president seems to have
Mr Trump’s backing at the moment; Mr Trump is currently “unhappy”
with Vladimir Putin. Soon after the announcement, Russia attacked
Ukraine with 728 drones, the biggest attack of the war so far.

Britain and France agreed for the first time to “co-ordinate” their
nuclear deterrents, and vowed a joint response to any “extreme
threat” to a European ally. The announcement was made during
Emmanuel Macron’s state visit to Britain·, the first by a political
leader from the EU since Brexit. It was also announced that the
Bayeux Tapestry, which illustrates the story of the Norman
conquest of England in 1066, will be displayed in England for the
first time in 900 years at an exhibition at the British Museum that
starts in late 2026.

In France police raided the headquarters of National Rally, the

hard-right party led by Marine Le Pen and the biggest party in the
assembly, as part of an investigation into whether it broke
campaign-finance laws.

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The lower house of the Dutch parliament passed legislation to deter
migrants, such as reducing the period in which someone can
temporarily claim asylum in the Netherlands from five years to
three and curtailing the right of families to join approved asylum-
seekers. The measures have long been promised by Geert Wilders,
whose hard-right Party for Freedom has the most seats in the lower
house.

The Danish prime minister, Mette Frederiksen, told the European

Parliament that “We have to lower the influx of migrants to
Europe”. Denmark has just taken up the six-month rotating
presidency of the Council of the European Union. Last year’s
European elections highlighted voters’ concerns that immigration is
too high, said Ms Frederiksen, which affects “the cohesion of our
societies”.

The Red Cross warned that Iran could forcibly deport another 1m
Afghans back to Afghanistan this year. The UN refugee agency
estimates that at least 800,000 Afghans have already been sent back
this year, 600,000 of them since Iran launched a crackdown on
foreigners in June, which is also when Israel attacked Iran. The

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expulsions from Iran come on top of the deportation of hundreds of
thousands of illegal Afghan migrants from Pakistan over the past two
years, straining aid agencies.

Russia formally recognised the Taliban government in Afghanistan,

the first country to do so since the Islamic militants swept back to
power in 2021. Women’s rights groups said Russia’s decision gave
succour to a government that is rolling back basic freedoms.
Meanwhile, the International Criminal Court in The Hague issued
arrest warrants for the Taliban’s supreme leader and the chief justice
for their persecution of women.

Protests in Mexico City against an influx of foreigners turned violent.

Mexico’s president, Claudia Sheinbaum, condemned the violence
and racist slogans, but has pledged that the government will do
more to tackle the problems associated with gentrification. The
number of foreign residents and tourists has increased since the
pandemic. Locals allege that they are being displaced by
unaffordable rents.

Donald Trump said Brazilian goods shipped to the United States

would be subject to a tariff of 50%. He made the announcement in
a letter to President Luiz Inácio Lula da Silva, in which he said that
Jair Bolsonaro, Brazil’s former far-right president, was being treated
unfairly. Mr Bolsonaro will soon face trial on charges that he plotted
a coup to remain in power after he lost an election in 2022. Mr
Trump called the case a “witch hunt”.

The United States withdrew its top diplomat from Colombia, which
initially responded in kind. In June President Gustavo Petro accused
Marco Rubio, the US secretary of state, of trying to overthrow him.
Mr Petro and his diplomats have since sought to backtrack from that.
Tensions are high after it was claimed that Mr Petro’s former foreign
minister was trying to push him from power.

Voices in the machine

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America’s State Department has warned its embassies that someone
is impersonating Mr Rubio using artificial intelligence. The person
has sent AI-generated messages on Signal to three foreign ministers
and two American politicians. Elon Musk wanted to replace half a
million government workers with AI when he ran the Department of
Government Efficiency (he is not the AI impostor, we think).
This article was downloaded by calibre from https://www.economist.com/the-world-
this-week/2025/07/10/politics

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The world this week

Business
7月 10, 2025 07:12 上午

Donald Trump pushed back a deadline for countries to reach a trade

deal with America from July 9th to August 1st, though he maintained
his threat to impose stiff tariffs· should those talks fail. Japan and
South Korea, for example, would face duties of 25%. The EU, which
is hoping to strike a preliminary deal, has so far been excluded from
the latest broadside. The president is piling the pressure on
countries that have not yet reached a deal. Only Britain and Vietnam
have agreed to “frameworks” so far. Canada, China and Mexico are
being treated separately.

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Mr Trump also announced that he would impose a 50% tariff on
copper starting on August 1st in order to encourage domestic
production of the metal. The price of copper soared on New York
markets, but fell on the London Metal Exchange as traders bet that
global demand would drop, leading to a huge 25% premium
between New York and London prices.

Linda Yaccarino announced that she is stepping down as chief

executive of X, Elon Musk’s social-media platform. She held the job
for two years. No reason was given for her departure. The day
before her announcement it emerged that XAI, which technically

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owns X, has had to remove posts generated by its Grok chatbot that
praised Adolf Hitler.

Australia’s central bank surprised markets by keeping its main

interest rate on hold at 3.85%. The Reserve Bank of Australia was
widely expected to plump for a cut, given that inflation has
moderated, but the bank’s accompanying statement emphasised its
concern about uncertainty in the global economy.

Britain’s public finances are in a precarious position, the Office of

Budget Responsibility warned in a report·. Underlying public debt as
a share of the economy is now at its highest level since the early
1960s, it said, and government efforts to tackle debt have had only
limited success; it recently backtracked on welfare reform, for
example. With the government’s borrowing costs in bond markets on
the rise, the country’s fiscal outlook “remains daunting”.

Winners and losers

Nvidia hit $4trn in market value, the first company to do so. With
demand for its high-end AI chips showing no signs of waning, the
company’s share price has risen by 45% since early May. By
contrast, Samsung forecast a 56% fall in its second-quarter
operating profit, year on year. It blamed America’s restrictions on
chip sales to China for the drop in profit, though analysts have noted
that it is falling behind SK Hynix and Micron in supplying AI chips to
the industry, most notably to Nvidia.

CoreWeave, a provider of AI cloud-computing services, agreed to

buy Core Scientific, a rival, for $9bn. Nvidia is a big investor in
CoreWeave, which buys its graphics processing units and rents them
out to tech firms. CoreWeave also has a relationship with Core
Scientific by leasing its data centres to increase AI power.
CoreWeave’s IPO in March raised only a fraction of what it had
sought, but its share price has since soared by 300%.

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As it contends with disruptions to its supply chain because of tariffs,
Apple appointed a new chief operating officer. Sabih Khan takes up
the job amid Mr Trump’s threats to impose stiff levies on smartphone
makers unless they move production to America. Separately, Apple is
reportedly seeking to buy the rights to broadcast Formula One
racing events in America after the success of “F1”. Starring Brad Pitt,
the film is Apple’s biggest box-office hit.

Shein has filed documents to float shares in Hong Kong, according

to press reports, in part as a means to press Britain’s financial
authority into approving its proposed IPO in London. The London
listing of the Chinese e-commerce firm has been held up by scrutiny
of its supply chain and related risk to its business from its dealings in
Xinjiang, where China has suppressed the Uyghur population.

Shein’s IPO would be a boost for the London market, where funds
raised from share flotations are at a 30-year low. By contrast the
number of firms waiting to list in Hong Kong is at an all-time high.
Hong Kong raised more money from IPOs in the first half of the year
than either the New York Stock Exchange or Nasdaq.
https://t.me/+NA8muckncd4yNDUx

Foot relief

The American government said passengers at airports would no

longer have to remove their shoes as they go through security,
ending a two-decade policy that was introduced amid the threat of
jihadists concealing bombs in their footwear. Travellers “will be very
excited” by not having to expose their feet, said Kristi Noem, the
secretary for homeland security. Airport screeners have been told to
toe the line on the new policy.
This article was downloaded by calibre from https://www.economist.com/the-world-
this-week/2025/07/10/business

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The world this week

The weekly cartoon

7月 10, 2025 08:48 上午

Dig deeper into the subject of this week’s cartoon:

Hamas looks close to defeat·

Ending the war in Gaza is still fiendishly difficult·

Israel’s weird war clock: 12 days for Iran, 21 months in Gaza

The editorial cartoon appears weekly in The Economist. You can see
last week’s here.

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this-week/2025/07/10/the-weekly-cartoon

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Leaders
Scrap the asylum system—and build
something better
It is not working :: Rich countries need to separate asylum from labour migration

Britain is cheap, and should learn to love it

Welcome to Poundland :: Workers and assets are on sale to the rest of the world for
bargain-basement prices

America cannot dodge the consequences of

rising tariffs for ever
Suddenly, then gradually :: Their economic impact has been delayed but not averted

After another leader is brought low,

Thailand’s voters need a real choice
Land of frowns :: The kingdom is stagnating while its elites squabble

Sex hormones could be mental-health

drugs too
Hormones :: If they can be liberated from ignorance and hucksterism

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It is not working

Scrap the asylum system—

and build something better
Rich countries need to separate asylum from labour migration
7月 10, 2025 07:13 上午

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THE RULES for refugees arose haphazardly. The UN Refugee
Convention of 1951 applied only to Europe, and aimed to stop
fugitives from Stalin being sent back to face his fury. It declared that
anyone forced to flee by a “well-founded fear” of persecution must
have sanctuary, and must not be returned to face peril (the principle
of “non-refoulement”). In 1967 the treaty was extended to the rest
of the world.

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Most countries have signed it. Yet dwindling numbers honour it.
China admits fewer refugees than tiny Lesotho and sends North
Koreans home to face the gulag. President Donald Trump has ended
asylum in America for nearly everyone except white South Africans,
and plans to spend more· on deporting irregular migrants than other
countries spend on defence. Western attitudes are hardening. In
Europe the views of social democrats and right-wing populists are
converging·.

The system is not working. Designed for post-war Europe, it cannot

cope· with a world of proliferating conflict, cheap travel and huge
wage disparities. Roughly 900m people would like to migrate
permanently. Since it is almost impossible for a citizen of a poor
country to move legally to a rich one, many move without
permission. In the past two decades many have discovered that
asylum offers a back door. Instead of crossing a border stealthily, as
in the past, they walk up to a border guard and request asylum,
knowing that the claim will take years to adjudicate and, in the
meantime, they can melt into the shadows and find work.

Voters are right to think the system has been gamed. Most asylum
claims in the European Union are now rejected outright. Fear of
border chaos has fuelled the rise of populism, from Brexit to Donald
Trump, and poisoned the debate about legal migration. To create a
system that offers safety for those who need it but also a reasonable
flow of labour migration, policymakers need to separate one from
the other.

Around 123m people have been displaced by conflict, disaster or

persecution, three times more than in 2010, partly because wars are
lasting longer. All these people have a right to seek safety. But
“safety” need not mean access to a rich country’s labour market.
Indeed, resettlement in rich countries will never be more than a tiny
part of the solution. In 2023 OECD countries received 2.7m claims
for asylum—a record number, but a pinprick compared with the size
of the problem.

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The most pragmatic approach would be to offer more refugees
sanctuary close to home. Typically, this means in the first safe
country or regional bloc where they set foot. Refugees who travel
shorter distances are more likely one day to return home. They are
also more likely to be welcomed by their hosts, who tend to be
culturally close to them and to be aware that they are seeking the
first available refuge from a calamity. This is why Europeans have
largely welcomed Ukrainians, Turks have been generous to Syrians
and Chadians to Sudanese.

Looking after refugees closer to home is often much cheaper. The

UN refugee agency spends less than $1 a day on each refugee in
Chad. Given limited budgets, rich countries would help far more
people by funding refugee agencies properly—which they currently
do not—than by housing refugees in first-world hostels or paying
armies of lawyers to argue over their cases. They should also assist
the host countries generously, and encourage them to let refugees
support themselves by working, as an increasing number do.

Compassionate Westerners may feel an urge to help the refugees

they see arriving on their shores. But if the journey is long, arduous
and costly, the ones who complete it will usually not be the most
desperate, but male, healthy and relatively well-off. Fugitives from
Syria’s war who made it to next-door Turkey were a broad cross-
section of Syrians; those who reached Europe were 15 times more
likely to have college degrees. When Germany opened its doors to
Syrians in 2015-16, it inspired 1m refugees who had already found
safety in Turkey to move to Europe in pursuit of higher wages. Many
went on to lead productive lives, but it is not obvious why they
deserved priority over the legions of other, sometimes better-
qualified people who would have relished the same opportunity.

Voters have made clear they want to choose whom to let in—and
this does not mean everyone who shows up and claims asylum. If
rich countries want to stem such arrivals, they need to change the
incentives. Migrants who trek from a safe country to a richer one

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should not be considered for asylum. Those who arrive should be
sent to a third country for processing. If governments want to host
refugees from far-off places, they can select them at source, where
the UN already registers them as they flee from war zones.

Some courts will say this violates the principle of non-refoulement.

But it need not if the third country is safe. Giorgia Meloni, Italy’s
prime minister, wants to send asylum-seekers to have their cases
heard in Albania, which qualifies. South Sudan, where Mr Trump
wants to dump illicit migrants, does not. Deals can be done to win
the co-operation of third-country governments, especially if rich
countries act together, as the EU is starting to. Once it becomes
clear that arriving uninvited confers no advantage, the numbers
doing so will plummet.

The politics of the possible

That should restore order at the frontier, and so create political

space for a calmer discussion of labour migration. Rich countries
would benefit from more foreign brains. Many also want young
hands to work on farms and in care homes, as Ms Meloni proposes.
An orderly influx of talent would make both host countries and the
migrants themselves more prosperous.

Dealing with the backlog of previous irregular arrivals would still be

hard. Mr Trump’s policy of mass deportation is both cruel and
expensive. Far better to let those who have put down roots stay,
while securing the border and changing the incentives for future
arrivals. If liberals do not build a better system, populists will build a
worse one. ■

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up to our weekly Cover Story newsletter.
This article was downloaded by calibre from
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something-better

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Welcome to Poundland

Britain is cheap, and should

learn to love it
Workers and assets are on sale to the rest of the world for bargain-
basement prices
7月 10, 2025 07:12 上午

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PANIC IS NEVER far off. After Britain’s government capitulated to a
backbench rebellion over welfare benefits earlier this month, bond
vigilantes bared their teeth and the prime minister, Sir Keir Starmer,
had to scramble to assure markets that he would not swap his
chancellor for someone more spendy. Fears over the public finances
had also struck in January, October and, most alarmingly, in 2022,
when Liz Truss was in office. This week the Office for Budget

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Responsibility (OBR), a fiscal watchdog, warned that, as Britain
becomes less able to deal with future shocks, it will face “daunting”
risks.

No surprise, therefore, that the doomsters command the public

stage. Britain’s population is ageing and too dependent on handouts.
Growth is dismal, public services are starved of funds and taxes are
high and look likely to drift higher. Yet few people in politics seem
able to square all that with the fact that Britain is already living
beyond its means and depends on loans from foreigners to pay the
bills.

The doomsters are right, but failure also contains a copper lining.
Call it the “Poundland” strategy, after the bargain retailer that
originally priced all items at just £1 ($1.36). Britain is cheap—
cheaper than warranted by the obvious risks. If the government can
seize the opportunity, then being value for money offers Britons a
pathway to better economic growth.

Britain’s sales pitch begins with the bargain-basement cost of assets

and labour. Gilts have lower prices (and hence higher yields) than
just about any rich-world bonds. Stock valuations are low, too—last
month Poundland itself was flogged to a Boston-based investment
firm for a token sum. Global investors are noticing how inexpensive
British assets look. AQR, a quant manager, has pegged the expected
future returns from British stocks and bonds as the highest of any
rich country. Larry Fink, the boss of BlackRock, a giant asset
manager, said Britain was “undervalued” in April, and claims to be
buying.

Well-educated British workers are cheap, too. Feeble wage growth

and the clobbering sterling took after the Brexit referendum has
made them cost-competitive, especially in services, including
consulting, IT, law, human resources and the like. JPMorgan Chase,
a bank, says that the cost of its technologists in Glasgow is closer to
that in India than Texas·. Indeed, services are just about the only

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success story in the British economy over the past decade. Services
exports to America, where the cost advantage is sharp, are up by
around three-quarters in inflation-adjusted terms since 2016.

Britain is well-protected against many of the traps that doubling

down on exports of mid-skilled services might spring. Countries like
Poland and India fret about never transitioning to high-skilled work.
Britain already has a few such niches, including banking, life
sciences and culture—just not enough to sustain the whole
economy. Artificial intelligence could automate away many of the
“email jobs” that Britain does well in, but under that scenario
Britain’s solid AI industry should do well enough to compensate.

The question is how to ensure Britain’s cheapness attracts the rest of

the world—rather than being seen as a fair price for serious risks.
The to-do list starts with what the IMF might tell an emerging-
market country looking to attract investors.

If the government repeats its recent debacle, it risks causing capital

flight. Sir Keir must not succumb to the temptation to run up more
debt, mess with credible institutions like the Bank of England and
the OBR, or attempt to create room for profligacy by once again
fiddling with the fiscal rules. Instead, he must confront the fantasy
economics which rejects all cuts to welfare as immoral without
regard to what is affordable.

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Next, Sir Keir should stop undermining Britain’s strengths. His
government is flirting with financial repression by nudging pension
funds to invest at home. If the aim is to secure more bids for
Britain’s cheap assets, attraction will work better than compulsion.
Labour also plans to improve workers’ lot by imposing extra
regulations on employers. That would erode a key advantage that
Britain has over most of mainland Europe and heap costs on
business. Sir Keir should remind rebellious Labour backbenchers that
the best way to help employees (and fund taxes) would be for
growth to boost their wages.

Last, the government should apply itself to reform. Sir Keir needs to
sort out post-Brexit sticking-points, including helping companies
move employees between countries and focus migration on the
high-skilled·. Labour is improving planning and should encourage
building in the places where lucrative outsourcing is happening,
particularly Britain’s second-tier cities, such as Birmingham, Glasgow
and Manchester. The baffling choice by the housing minister to
support a local council’s objections to a new film studio being
developed on farmland near London suggests that plenty of

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blockerish instincts still lurk behind the government’s pro-building
rhetoric.

The rub is the politics. Embracing the Poundland strategy would run
against a century of rhetoric obsessed with restoring the Great to
Great Britain. After the chest-thumping of the Brexit era, a
Poundland prime minister would be accused of declinism and of
selling Britain short. The attacks would be especially fierce on the
right, where Reform UK, Nigel Farage’s populist party, is waiting
impatiently in the wings with a fantastical, deficit-exploding offer of
its own.

Roll up, roll up!

Sir Keir has reality on his side. Since the financial crisis of 2007-09,
Britain has fallen behind economically; since Brexit, it has fallen
behind diplomatically. Supposing he can retain control of his party,
the prime minister has a vast parliamentary majority and four clear
years to execute his agenda: a position most rich-world governments
can only dream of. Armed with the Poundland strategy, Sir Keir can
make Britons better off. Instead of being cheap for a reason, the
country would seem worth backing. After a decade of sorry growth,
Britain has no shame—and lots to gain—from being a bargain. ■

For subscribers only: to see how we design each week’s cover, sign
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This article was downloaded by calibre from
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love-it

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Suddenly, then gradually

America cannot dodge the

consequences of rising tariffs
for ever
Their economic impact has been delayed but not averted
7月 10, 2025 07:13 上午

THREE MONTHS ago a tariff announcement by Donald Trump

caused a market meltdown. More recently his words have mostly
elicited a shrug. On July 7th America’s president published letters he
had sent to 14 countries threatening “reciprocal” tariffs to be
introduced by August 1st, including levies of 25% on Japan and
South Korea. The next day he said he would impose a 50% charge
on copper and, after a possible year and a half’s notice, up to 200%

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on pharmaceuticals. The day after that, he escalated a political row
with Brazil by threatening it with tariffs of 50%. Yet although the
copper price soared and Brazilian markets shivered, global equity
and bond markets seem unaffected. Panic has given way to placidity.

Everyone has a pet theory for this. One is that Mr Trump is not
serious: most of the “Liberation Day” tariffs that caused the crash in
April were postponed; the threat to impose similar tariffs in August
seems empty. What the president really wants is deals. Another is
that lots of tariffs have been levied, but their impact has not been as
bad as feared. A third is that Mr Trump will back off if the markets or
the economy take fright, so pessimism does not pay.

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These arguments are inconsistent. They are also flawed. Take the
policies that have gone into effect. Although Mr Trump tempered his
Liberation Day barrage, tariffs have been relentlessly creeping up.
The average rate has reached around 10%, compared with just
2.5% last year. The threatened August 1st and sectoral tariffs would
raise that to 16-17%, ie, most of the way to the roughly 20% that
loomed over the economy in the spring. Even the deals that have
been struck, with Britain and Vietnam, have left in place much
higher trade barriers than existed at the start of the year. Besides,
the federal government increasingly needs the money raised by high
tariffs to help pay for Mr Trump’s One Big Beautiful Bill.

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Contrary to received wisdom, these tariffs are hurting the economy.
Consumption and retail sales have been weak. America is on course
to grow only about half as fast this year as it did in 2024. Inflation
remains relatively low—but import prices show that American
companies, not foreigners, are sparing consumers from the full
burden of tariffs. Many are probably trying to avoid raising prices in
the hope of a reprieve. They can do so because they stockpiled
imports at the start of the year. Eventually, though, higher costs will
tell and prices will rise. Inflation is likely to end the year above 3%.

Relying on Mr Trump to chicken out is paradoxical. If markets do not

react to announcements of damaging policies, then nothing is
forcing him to back off. It is also complacent. When Mr Trump avoids
cliff-edges as big as Liberation Day, by raising tariffs gradually, the
feedback from markets and the real economy is subtler. Yet America
will surely grow more slowly than it would have—like Britain since
Brexit.

Some of the worst fears from the spring have indeed been proved
wrong: retaliation against America has been limited. And Mr Trump
is right to think he has negotiating leverage, especially over smaller,
trade-dependent economies. But Mr Trump’s apparent wish to turn
tariff policy into a constant bilateral negotiation is not in America’s
interest. It encourages firms to pour their efforts into lobbying the
government for changes and exemptions, rather than making their
products better. And although uncertainty has so far obscured the
harm from tariffs—because companies and countries are waiting to
see what unfolds—uncertainty will eventually become a cost in itself.
Gradual corrosion in an economy is easier to ignore than a crisis, but
it is no less harmful. ■

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which brings together the best of our leaders, columns, guest essays
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of-rising-tariffs-for-ever

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Land of frowns

After another leader is

brought low, Thailand’s
voters need a real choice
The kingdom is stagnating while its elites squabble
7月 10, 2025 07:13 上午

IN THEORY IT was a phone call that landed Thailand’s prime

minister, Paetongtarn Shinawatra, in trouble. Last month someone
leaked a recording of her speaking to Hun Sen of Cambodia about a
border dispute. Critics said she sounded subservient and had
disparaged Thailand’s armed forces. In early July Thailand’s
constitutional court said her words may have breached ethics rules;
it suspended her from office, pending further inquiries. The deputy

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prime minister is serving as caretaker while everyone works out
what to do next.

There is no doubt that Ms Paetongtarn has made costly mistakes.

She got the job largely because she is the daughter of Thaksin
Shinawatra, a tycoon who ran Thailand between 2001 and 2006; in
office for less than a year, she has often looked green. Yet anyone
who thinks the reason for her travails is her phone manner is also
being naive. Thailand’s ruling establishment—its army, the palace
and assorted other magnates—has long felt entitled to sack
politicians whenever they believe their own interests are under
threat.

For decades these elites have worked hard to make sure that
Thailand’s democracy is never much more than a veneer· . The army
has launched a dozen successful coups since the 1930s, including in
2006 and 2014. More recently, the powers that be have been using
friendly constitutional judges to make sure no one can change the
country in ways they might dislike. After a general election in 2023,
stooges in the Senate prevented Move Forward, a party of young
liberals that had won the most seats, from forming a government.
This promising grouping was dissolved by order of a judge, and its
leaders banned from politics for ten years.

Instead of the people it voted for, the country ended up with the
fractious and failing coalition government that Ms Paetongtarn had,
until this month, been leading. It throws pro-army factions together
with Pheu Thai, a populist party founded by Ms Paetongtarn’s father
that once claimed to speak for the poor but which no longer seems
fussed about them. For a while Thailand’s generals (who have twice
before ousted Mr Thaksin’s lot) appeared to find this arrangement
convenient. But lately they have again been unable to let the
politicians get on with their jobs. Ms Paetongtarn came to office last
August only because her predecessor was turfed out for breaching
vague “ethics” rules. Now she herself may fall in a similar way.

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While the elites squabble, Thailand is stagnating. Its economy is
expected to grow by 1.8% this year, down from 2.5% in 2024.
Tourism arrivals fell in the first half of 2025; the numbers coming
from China sank by a third. Exports to America, one of Thailand’s
biggest trade partners, risk being whacked with high tariffs. And
leaders have made no headway on big underlying problems, such as
a shockingly anticompetitive environment for business. This is all the
more tragic given Thailand’s many advantages: its relative wealth, a
sophisticated middle class and breathtaking landscapes.

Back-room negotiations could soon install a new prime minister. If

so, he or she would be the third in 12 months. Yet if this wrangling
fails—or, more probably, if the fix proves short-lived—frustration and
protests are likely to mount. And that could become a pretext for yet
another coup.

What Thailand really needs are fresh elections: fought freely, with
the winning party given every opportunity to form a coalition that
can actually govern. When Thais return to the ballot boxes, the
young liberals from Move Forward—many of whom have regrouped
as the People’s Party—will once again do very well. Their resilience is
a reason to be optimistic about Thailand’s future, even when much
else looks grim. Unfortunately, Bangkok’s old guard look no more
willing than before to loosen their grip on the levers of power. If they
really cared for their country, they would. ■

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which brings together the best of our leaders, columns, guest essays
and reader correspondence.
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Hormones

Sex hormones could be

mental-health drugs too
If they can be liberated from ignorance and hucksterism
7月 10, 2025 07:12 上午

POOR MENTAL health is a scourge. Prescriptions for anti-

depressants and anti-anxiety medicines have soared in rich countries
in recent decades. Yet they do not work for everyone. Perhaps a
third of people with serious depression, for instance, report that
drugs seem to have little effect. Doctors are therefore beginning to
look further afield.

As we report this week, one promising area is hormone therapy·.

The idea is to boost levels of naturally occurring hormones in

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patients’ bodies—and in particular, to tweak sex hormones such as
oestrogen, progesterone and testosterone. New ways to treat mental
illness should be celebrated. Making the most of them, however, will
involve dispelling the poor reputation that hormones have gained
over the years.

Hormone-replacement therapy (HRT) is best known as a treatment

for the physical symptoms, such as hot flushes or night sweats, that
come with menopause, when a woman’s levels of oestrogen and
progesterone drop. But, as any parent of teenagers will tell you,
hormones can influence the mind as well as the body. Evidence
suggests that restoring hormone levels can sometimes ease
symptoms of many disorders, including depression and
schizophrenia, that have resisted other treatments.

It is not just women who can benefit. Men do not experience

anything like the fluctuation in hormones tied to various life stages
such as menopause. But many (perhaps a third of older men) seem
to have lower levels of testosterone than they should. There is
growing evidence that giving those men extra testosterone can help
with mood disorders, too.

The problem is that many patients—and even some doctors—remain

wary of hormonal treatments, because of their bad name among the
public. Excessive worries about a small increase in breast-cancer risk
have dogged women’s HRT since the early years of this century.
Even now, only 5% or so of menopausal women in America take it.
This situation is not helped by the persistence of the naturalistic
fallacy, which holds that what is natural—like the menopause and
male ageing—must be good, and so is not in need of treatment.

With testosterone replacement in men, the problem is too much

enthusiasm among people who want cosmetic rather than medical
benefits. Testosterone is a potent performance-enhancing drug. In
America, in particular, an industry has emerged to sell the hormone
to middle-aged men·. Rife with hucksters and Instagram influencers,

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it pitches testosterone as a fountain of youth: a way to pack on
muscle, restore sex drive and generally turn back the clock on
ageing. Less is said about the downsides: that testosterone causes
infertility, say, or that high doses are bad for your heart. Even the
clinics themselves admit that shady prescribing is driving the
industry into disrepute, though many say their rivals are to blame.

For the testosterone business, better regulation is the place to start.

Clinics should be required to test their customers and clearly spell
out the downsides. For women, awareness is the key. Fears about
HRT and breast cancer have been overplayed; and anyway, HRT
brings health benefits by, for example, cutting the risk of
osteoporosis. When it comes to mental health, hormonal treatments
should undergo clinical trials to identify which patients stand to
benefit: because hormones are cheap, the gains could be huge. If
patients can be made less wary of sex hormones, many more people
could be helped by them—for ailments of the mind as well as of the
body. ■

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which brings together the best of our leaders, columns, guest essays
and reader correspondence.
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Letters
Cash is an ineffective way of boosting birth
rates
A selection of correspondence :: Also this week, imprisonment in Myanmar, the value
of college degrees, getting lost in India

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A selection of correspondence

Cash is an ineffective way of

boosting birth rates
Also this week, imprisonment in Myanmar, the value of college
degrees, getting lost in India
7月 10, 2025 07:13 上午

Letters are welcome via email to letters@economist.com

Find out more about how we process your letter

The babies boon

“Babies on the brain” (June 21st) correctly argued that cash is an

ineffective way of boosting births. Demographers put the return on

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investment at no more than 20%. It is hard to imagine Western
governments tripling child benefits in order to lift fertility rates from
1.3-1.6 children per woman to population-replacement levels.

But that doesn’t make pro-natalism a lost cause, let alone a right-
wing one. Surveys show that people in wealthy countries have fewer
children than they want. Enacted together, policies such as better-
paid and more gender-equal parental leave, accessible child care,
and indeed more generous child benefits, might result in every other
family having one more child than they otherwise would.

Crucially, better family policy brings other dividends, too. Take

Poland, which provides the largest child benefits in Europe. Dubbed
as Family 500+, these began as a pro-natalist pet project of the
previous conservative government. Although the effect on births has
been limited, the policies have significantly helped decrease child
poverty. This has prompted the current liberal government not only
to keep but also to extend the policy, renaming it Family 800+, for
the 800 zloty ($222) available per child each month.

Contrast that with Britain, which ranks dead last for benefit spending
among developed countries, with the infamous two-child benefit cap
driving up child poverty since 2017. Rather than crying foul at Nigel
Farage, the Labour government should ask itself why it has
surrendered a core progressive cause to the hard right.

KRISTIJAN FIDANOVSKI
Demographer
Department of Social Policy and Intervention
University of Oxford

You highlighted the expensive cost and limited effectiveness of state-

driven baby booms. But artificial intelligence is the elephant in the
delivery room. The underlying assumption that ageing societies must
increase births to sustain support ratios feels increasingly outdated.
Advances in AI and automation are already transforming the

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relationship between productivity and population. In tomorrow’s
economy, fewer humans may be required to generate the same or
greater output. That challenges the notion that we need ever more
workers to support ever more retirees.

Oddly, you name Elon Musk as the “procreator-in-chief”, yet sidestep

the world he is actually helping to build, where machines rather than
people pick up the economic slack. If AI is truly the future, then the
real question is how to equitably distribute machine-enabled
prosperity in a world with fewer babies, not more.

Dr Henning Stein
Zurich

The reality in Myanmar

You acknowledged the 80th birthday of Aung San Suu Kyi,

Myanmar’s jailed democracy leader (“A tarnished legacy”, June
28th). You say that she and I were kept “in detention” by the
country’s military junta. Euphemisms have their place, but that does
not even begin to describe the jailing, unjust show trials and torture
suffered by me and an estimated 30,000 other political prisoners in
Myanmar. Thousands more have been killed since the coup of
February 2021, which was launched partly in order to stop the sort
of liberal economic reforms The Economist has long championed.

Your coverage of Myanmar’s struggle is welcome at a time when

much of the rest of the media ignores it, but in doing so let us be
clear about what has been happening, and what is at stake.

Sean Turnell
Senior economic adviser to the government of Myanmar, 2016-21
Sydney

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Hard lessons about hard power

The essay by Ban Ki-moon and Helen Clark on the need for a
stronger UN was undercut by their view that reform can only come
from within and on their terms, including gender requirements and
neutering the Security Council (By Invitation, June 28th). In the
same issue, the Charlemagne, Lexington and Telegram columns all
highlighted the global reality of hard power. In fact, The Telegram’s
observation that “In post-war Europe, crafting elegant rationales for
impotence is a prized skill” applies equally to the Pollyannaish views
of Mr Ki-Moon and Ms Clark.

John Strong
Williamsburg, Virginia

Mr Ki-Moon and Ms Clark obviously did not read your article from
May (”Deadbeats united”, May 3rd) on the financial state of the UN
before writing their cri de coeur for institutional reform. The UN is a
financial anachronism. Its money problems are much more a matter
of legacy DEI structures and administrative processes than the
recent, admittedly widespread, cuts to international aid.

Furthermore, implying that the Security Council has “failed to

prevent many conflicts over the decades” is risible. A tiny
organisation, forever hostage to monthly changes in uneven
leadership, expresses wishes and writes resolutions that it has no
means to realise, and adds to the thousands of ever-living past
resolutions, often in ways that degrade focus and clarity on the issue
at hand.

If the UN survives 2025 more than less intact, its future will then
depend on an urgent transformation to a more business-like
meritocracy that, once again, deserves the respect and contributions
of all its members.

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David Harries
Kingston, Canada

Degrees of satisfaction

Today’s graduates are screwed, you say (“Crammed and damned”,

June 21st). It is true that recent American college graduates are
struggling to find jobs. But it is wrong to suggest that a college
degree is not worth pursuing. For the foreseeable future, college
graduates are projected to have a much better chance of getting a
good job than those without a college degree. You put the onus of
reform on students, arguing that they should make better degree
choices. Maybe. But surely the emphasis should be on colleges to
tackle the cause of lower student enrolment numbers and
strengthen the value of a degree.

Colleges need to do more to ensure the success of each and every

student. That will lead to higher graduation rates in a country where
around a third of students drop out, and create a situation where
every academic degree prepares students for meaningful work in the
marketplace (some currently don’t). Colleges that do both will secure
more students because they will ensure that a degree is worth the
investment, for both the skills that students learn and the extra
income they derive from a better-paying job.

Josh Wyner
Vice-president
Aspen Institute
Washington, DC

It is frankly a little disappointing that you push the idea that the only
objective for going to a university is preparing for a good job. I do
not deny that this can be the main reason for most students, but it
precludes other goals, such as a better understanding of the world
around you, personal development and the joy of learning new

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things. The goal of a university education should not be to prepare
students for jobs, but to prepare them for their future life. After all, I
would not like to live in a world in which career earnings were the
only factor in choosing a university degree. Everybody would choose
engineering or (perish the thought) management.

Nicolae Urs
Associate dean
College of Political, Administrative and Communication Sciences
Babes-Bolyai University
Cluj-Napoca, Romania

Students naive enough to pursue liberal-arts degrees will come off

the worst off of all, you argue. It is true we are in an era where
artificial intelligence will take on more of the entry-level work
typically handed to junior employees. One long-term effect of this is
that the next generation of workers lose the chance to gain the
experiences that can move them beyond the simple knowing of how
to do a task to the stage of knowing what needs to be prioritised
and why. Over time, people in management will find that by getting
rid of entry-level jobs they suddenly have a dearth of capable middle
managers able to run their businesses with any degree of self-
sufficiency.

This is where liberal-arts degrees become valuable. Subjects such as

literature and history draw inferences from past events, spot
patterns in complex political and economic systems and understand
the higher order future implications of present actions.

The liberal arts, done right, teach people how to think. They learn
how to synthesise ideas. And, crucially, how to ask better questions.
In a world where the most complex math problem can be solved by
simply showing a picture of the problem to your Google phone,
those “soft” skills are the ones employers will learn to prize. Those
disciplines will evolve to develop those skills and help create the next
generation of knowledge workers, canny individuals who are adept

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at delegating the mundane tasks of “how” and even “what” to their
shiny new AI lackeys, and using their time to ask the most important
question of all: “why”?

Brian Fitzgerald
Sturbridge, Massachusetts

A master storyteller

As well as the works by Frederick Forsyth that you mentioned in his

obituary in the Culture section (“Death of a plotter”, June 14th),
“The Shepherd” is an annual favourite for his fans. Published in 1975
it is a short and ghostly tale of a Royal Air Force pilot returning home
from his base in Germany in a Vampire single-engine jet on
Christmas Eve. I read it every year on that day. CBC Radio has been
broadcasting it each December on its “As It Happens” show. It’s a
moving holiday tale enjoyed by many, especially pilots and those
with a love of aviation.

Sebastian Dunne
Arlington, Virginia

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Ask the locals

You wrote about a digital solution to India’s chaotic address system

(“You are… somewhere”, June 7th). I have travelled extensively
across the Indian hinterland. Even today, despite the availability of
Google Maps, I find greater accuracy and assurance in asking the
local paanwala or kirana store owner for directions. Their knowledge
of winding village roads, temporary diversions and unnamed bylanes
is unmatched. They are reliable guides, and a reflection of the deep
social fabric of rural India.

Thank you for highlighting this charming and often overlooked reality
of Indian travel.

JANARDHANAN NAIR
Thane, India

India should use an app like what3words, which identifies any

location on Earth within a three-metre square box. Rescue services
use this or similar apps in America and Britain. By the way, one of
the three-word identifiers for 10 Downing Street is slurs.this.shark.

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Beatrice Claire Barker
Champaign, Illinois
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By Invitation
To understand America today, study the
zero-sum mindset, writes Stefanie
Stantcheva
A win-lose situation? :: Young people and city-dwellers are among those most likely
to see one group’s gain as another’s loss

Vinod Khosla on how the anti-green agenda

could help climate tech
The greenlash’s silver lining :: The key will be to develop technologies at prices
attractive to China and India

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A win-lose situation?

To understand America today,

study the zero-sum mindset,
writes Stefanie Stantcheva
Young people and city-dwellers are among those most likely to see
one group’s gain as another’s loss
7月 10, 2025 07:12 上午

LOOK AT THE news or social media these days, and you might see a
pattern. Stories are about groups in conflict, competing for limited
resources, with the gains for some framed as losses for others. If
China benefits from trade with America, America must lose. If
foreign students enroll at American universities, that must mean
fewer spots for Americans. If immigrants find work, they must be

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taking jobs from citizens. If a diversity initiative helps women or a
racial minority, someone else must be left out. More and more,
debates are shaped by a mindset that sees the world as a fixed pie—
where one person’s or one group’s gain is another’s loss. That
mindset is known as zero-sum thinking. And it is crucial to
understanding the politics and economics of America today.

Where does this mindset come from, who holds it and what does it
mean for policy? These were the questions we addressed in a large
study at the Social Economics Lab at Harvard, where we focus on
how people think about economic issues and policies.

Some groups are more likely than others to see the world in zero-
sum terms. People in cities, for example, tend to think this way more
than those in rural areas, perhaps because urban life involves
intense competition for housing and jobs. People with more formal
education are less likely to see the world as zero-sum but the
pattern flips among the highly educated: those with PhDs often
show the strongest zero-sum beliefs. This could be because
competitive graduate programmes attract people who already think
this way or because they encourage this mindset through intense
competition. Perhaps the most striking finding is that younger
generations today are much more zero-sum than older ones.

What does this mindset mean for politics and policies? Unlike many
other beliefs today, zero-sum thinking doesn’t fall neatly along party
lines and is not a clearly left-wing or right-wing mindset. Instead, it
can lead people to support policies from both ends of the political
spectrum.

At its core, zero-sum thinking involves a belief that one group is

being taken advantage of, and that government action is needed to
help them. If you believe, for example, that rich people gained their
wealth at the expense of poorer people—and reject the idea that
prosperity “trickles down” or lifts all boats—you are more likely to
support higher taxes on the rich and more redistribution to help the

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poor. If you think some groups are systematically held back by
others, you may be more likely to support affirmative action. But
zero-sum thinkers are also more likely to favour stricter immigration
rules to protect domestic interests from what they see as direct
competition.

To understand the zero-sum mindset—and why it varies across

groups—it is necessary to look at where it comes from. This way of
thinking doesn’t just appear out of nowhere; it stems from people’s
economic environment and experiences—not only their own, but also
those of their families and even earlier generations. Economic
mobility and growth play a big role. People who have done better
than their parents, or whose families have experienced upward
mobility over time, are less likely to think in zero-sum terms. This
also explains why younger generations in America are more zero-
sum: they have grown up during times of slower economic growth
and lower mobility. Other rich countries exhibit a similar generational
pattern. In contrast, in many poorer countries where younger
generations have experienced more growth than earlier ones, the
pattern flips.

Another important positive-sum experience is immigration;

immigrants in America have historically done well economically and
contributed to their communities. Those with immigrant ancestry are
less likely to think in zero-sum terms. But even indirect exposure
matters: people who grew up in places that historically had more
immigrants also tend to hold more positive-sum views.

On the other side of the coin, the experience of a deeply zero-sum

system pushes people towards a more zero-sum outlook. For
instance, people whose ancestors were subjected to slavery,
persecuted during the Holocaust or forced onto reservations are
more likely to hold zero-sum beliefs today.

But the effect goes beyond direct family history. People living in
parts of America where slavery was widespread also tend to be more

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zero-sum, even if not descended from enslaved people. And this
mindset has not stayed confined to those areas. Places that never
had slavery themselves but took in many migrants from the
American South—who brought with them a worldview shaped by
that system—also show higher levels of zero-sum thinking today.

Thus, zero-sum thinking shouldn’t be dismissed as just a bias—it is

shaped by the experiences and economic conditions people live
through. For many, zero-sumness reflects the reality they’ve faced.
And, indeed, some situations truly are zero-sum, especially in the
short run—when jobs are scarce, resources limited or competition
intense. But policy helps shape these conditions. It can make the
world more zero-sum or more positive-sum.

Some policies are especially likely to create win-win outcomes,

particularly over the long run. These include policies that expand
opportunity, such as strong public education, access to health care
and support for poorer families; investments in innovation to expand
the overall economic pie; and policies to mitigate climate change,
protect the environment and conserve natural resources to reduce
the sense of scarcity that fuels zero-sum thinking. Policies like these
can help create the conditions for a more positive-sum economy—
and make it easier for people to believe that one group’s progress
need not come at the cost of another’s.■

Stefanie Stantcheva is an economics professor at Harvard and

founder and director of the Social Economics Lab. She was awarded
the 2025 John Bates Clark Medal.
This article was downloaded by calibre from https://www.economist.com/by-
invitation/2025/07/07/to-understand-america-today-study-the-zero-sum-mindset-writes-
stefanie-stantcheva

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The greenlash’s silver lining

Vinod Khosla on how the anti-

green agenda could help
climate tech
The key will be to develop technologies at prices attractive to China
and India
7月 10, 2025 07:13 上午

CLIMATE-TECH INNOVATION and reshoring help America in the

global battle for manufacturing supremacy, and in building the
economic power that comes from technological superiority, even in
Donald Trump’s “don’t believe in climate change” era. Congress has
just passed a tax-and-spending bill that, among other things,
eviscerates the Inflation Reduction Act (IRA), Joe Biden’s flagship

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climate law, but this is no time to dismiss climate tech as a tree-
hugging virtue. On the contrary, it is one of the most important
levers of geopolitical influence. Power will accrue to those who can
produce critical energy and industrial commodities at competitive
prices. I call this the “Chindia price”, a cost point at which China,
India and others adopt the technologies behind these because they
are the cheapest without subsidy.

China’s dominance in solar manufacturing is a stark example of the

economic prowess conferred by these crucial climate markets.
China’s clean-energy sector (primarily solar, energy storage and
electric vehicles) contributed about $1.6trn, or roughly 9%, to
China’s $18trn economy in 2023. Perhaps more important, China’s
ownership of over four-fifths of global solar manufacturing means
that it has twice the share of the solar-hardware market as the
entire OPEC+ cartel has in petroleum.

I believe that the climate tech that matters involves only about a
dozen technologies. Among these, only those that match or beat
fossil fuels on price are currently worth pursuing. By scaling and
exporting them, America can increase its manufacturing prowess,
cement its techno-economic lead and blunt China’s industrial
advantage. The rationale for scaling does not, in other words,
depend on whether or not you believe in climate change.

America can recover its lost lead in manufacturing technology for

cement and steel, and become the leader in dispatchable (ie,
producible on demand) energy like fusion and advanced geothermal
technologies, particularly “super hot” geothermal, or SHG. In my
judgment as a long-standing climate investor, these breakthroughs
will be at or near economic viability well within a decade. (Full
disclosure: I have invested in many of these promising technologies,
both winners and losers.)

American fusion startups are making rapid progress. Instead of

wasting tens of billions of dollars on the ITER fusion project, a

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boondoggle collaboration among 35 countries, American public
efforts should focus on initial deployments of clearly superior
American technologies. Instead of shuttering coal plants, we might
soon be in a position to swap their boilers and turbines for fusion
boilers when they come up for replacement. Emissions would
plummet, assets would stay productive—and the transition could
take place at the pace of scheduled maintenance. American fusion
startups like Realta, Helion and Commonwealth Fusion Systems can
power the planet.

Similarly, SHG could increase energy production dramatically by

tapping into the 400°C-plus heat miles beneath the Earth’s surface.
This approach holds out the promise of producing clean power at a
cost competitive with natural gas. Private capital is already
supporting drilling. The government’s role should be to offer offtake
(long-term purchase) contracts, so projects can get financed. These
technologies will not require subsidies once scaled.

America can also lead in low-cost, low-carbon-emission steel and

cement. This will require narrowing the “green premium”—the price
gap between the traditional and low-carbon versions. The best next-
generation steel technologies are likely to match today’s steel-
production costs while running on standard scrap and low-grade ore
blends, and using existing steel-furnace supply chains. America can
then reduce its reliance on imports, lock in domestic supply and
increase exports. The pay-off would be strategic self-reliance and
products that compete globally on both price and emissions.

Green-cement retrofits should be equally bold and market-minded.

The key is to capture the kiln’s CO2, mineralise it on-site and boost
cement output with no additional input of limestone. Done properly,
the upgrades would bolt onto existing plants rather than replacing
them, cutting emissions while decreasing cost per ton and increasing
output. That would turn legacy American cement facilities into
producers of a low-carbon version that could replace imports.

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Early-stage support must exclusively fund breakthroughs that will
reach unsubsidised competitiveness by the time they grab a few
percentage points of market share. Subsidies, if any, must be
carefully targeted, temporary and taper over time.

Shamefully, the IRA allocates far too much money to mature

technologies that no longer need subsidies—including solar, wind
and EVs—at the expense of nascent innovations. Worse, some
subsidies incentivise abuse of the system, such as those that funnel
billions of dollars into sustainable aviation fuel derived from cooking
oil and corn ethanol, which are little more than subsidy traps that fail
the tests of scalability, practicality and science. Besides, solar, wind
and EV are mature enough to not need subsidies any longer.

Policy must also avoid conflating climate progress with unrelated

goals like climate justice. Environmentalists often propose solutions
divorced from the laws of economic gravity. Their opposition to
nuclear energy led to more coal plants being built. The main goal
should be to position American business to win over the long term;
lower carbon emissions will be a corollary benefit.

By keeping our eyes on scale and long-term economic viability, we

can avoid squandering public funds and instead encourage
breakthroughs that drive down costs and reduce emissions while
increasing exports. The focus should be on economic growth. That,
more than anything else, will create the additional resources to fund
future green technology.

Even in the Trump era, by making manufacturing the centrepiece of

climate strategy America can lead the transition to a low-carbon
future. By judiciously supporting climate technologies that are nearly
viable economically and sending those that are too expensive back
to R&D, we can balance short- and long-term societal needs. Rather
than waste the crisis arising from climate change, we must use it to
make American technologies world-beating once more.

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Mr Trump’s hostility to the very idea of climate change may yet end
up making green technologies better—by forcing a rethink on
wasteful subsidies and refocusing government efforts on the most
promising tech to scale. That would separate the wheat from the pile
of chaff that passes for climate action today. ■

Vinod Khosla is a venture capitalist. He founded Khosla Ventures and

co-founded Sun Microsystems.
This article was downloaded by calibre from https://www.economist.com/by-
invitation/2025/07/09/vinod-khosla-on-how-the-anti-green-agenda-could-help-climate-
tech

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Briefing
The global asylum system is falling apart
Wretched, refused :: What should replace it?

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Wretched, refused

The global asylum system is

falling apart
What should replace it?
7月 10, 2025 07:13 上午 | Adré, El Paso and London

MIGUEL ARRIVED in Britain from Latin America in 2018. He applied

for asylum, saying he was fleeing gangsters who would kill him if he
returned. Seven years later, his case has still not been resolved.

British officials have taken ages to reach a decision because they

have no easy way to determine whether the danger he says he faces
is real. Gangsters do not publish their hit lists. If the danger is
genuine, could Miguel have escaped it by moving to a different city
or a neighbouring country, rather than flying all the way to Europe?

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Lawyers have spent seven years debating unverifiable facts about
distant criminals.

Across the rich world, politicians of the left and the right decry the
dysfunction of the global asylum system. Friedrich Merz, Germany’s
conservative chancellor, calls it a “shambles”. In May the leaders of
nine EU countries, including Italy and Poland, signed a letter
complaining that international conventions on migration no longer
“match the challenges that we face today”. Donald Trump has closed
off asylum in America for practically everyone except white South
Africans. Even those who strongly support a right to sanctuary fear
that the apparatus for allocating it is rusty. Amy Pope, head of the
International Organisation for Migration, a UN body, calls it
“outdated, slow and vulnerable to abuse”.

Flight risk

Several factors have stretched the system to breaking point. First,

the number of people who have been forced to flee their homes to
escape war or persecution has tripled since 2010, according to the
Office of the UN High Commissioner for Refugees (UNHCR), reaching
123m at the end of 2024. Rules forbidding armies from targeting
civilians are more widely flouted than in the past, laments Filippo
Grandi, the head of UNHCR. And wars are lasting longer, so fugitives
stay away for longer.

Meanwhile, the share of the world’s adults who would like to migrate
permanently, for any reason, has risen from 12% in 2011 to 16% in
2023, or roughly 900m people, according to Gallup. The rich world is
not prepared to let in anything like 900m permanent immigrants;
that would be 140 times as many as it admitted in 2023. In fact, it is
almost impossible for workers from poor countries to migrate legally
to rich ones, unless they have close family ties or exceptional skills.

So many move without permission. A couple of decades ago, such

illicit migrants tried hard to avoid detection. But recent ones realised

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that if they walked up to a border guard in Europe or America and
asked for asylum, the host country would then assess whether they
faced persecution back home. This can take years, during which
time the claimant can often vanish into the shadows and find work.

Claims for asylum in the rich world shot up. In 2023, 2.7m new
applications were lodged in OECD countries, more than the nearly
1.7m a year during the Syrian refugee crisis of 2015 and 2016 (see
chart 1). Many claims are dubious. In the EU the proportion that

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succeed has fallen from 57% in 2016 to 42% in 2024. Nearly half of
applicants come from countries that have a success rate of below
20%. Twice as many asylum recipients in Britain said they were 17
when they applied as said they were 19, presumably because they
think the system is kinder to children.

There is nothing wrong with seeking a better life. But when

jobseekers and refugees both crowd into the same funnel, malign
consequences follow. Voters in rich countries start to feel they are
being defrauded; that many asylum-seekers are lying about the
horrors they face back home. And even if they are telling the truth,
many voters do not see why the fear of persecution in, say,
Venezuela, entitles someone to cross from Mexico into the United
States. A sense that the refugee system is being gamed saps
support for it—and for liberal migration policies in general.

How could the world’s asylum system be redesigned? What is the

least-bad way to offer sanctuary to those in peril that is also
politically feasible?

Conventional folly

Attempts to answer these questions usually start with international

law. The UN Refugee Convention of 1951 says that those who flee
their country owing to a “well-founded fear of being persecuted for
reasons of race, religion, nationality, membership of a particular
social group or political opinion” are entitled to refuge and may not
be sent back to face danger. The convention originally applied only
to post-war Europe, to spare fugitives from the Soviet Union from
being sent back to face Stalin’s wrath. It was extended to the whole
world by a protocol in 1967.

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Most countries have signed both documents. But they uphold them
in wildly different ways. Europe and North America have long been
fairly generous. The principles of the UN convention are incorporated
into EU law and enforced by national courts. When Italy recently
began sending asylum-seekers to Albania while their claims were
processed, judges ruled the scheme illegal. In contrast China,
though a signatory to the convention, treats its principles as
optional. It admitted only 296 refugees in 2023, fewer than tiny

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Liechtenstein. It routinely sends fugitives from next-door North
Korea home to face prison camp or execution.

“Most countries fail to comply” with the convention, argued Paul

Collier and Alexander Betts, two Oxford professors, in “Refuge”, a
book published shortly after the refugee crisis of 2015-16.
Conversely, several non-signatories, such as Jordan, Lebanon and
Pakistan, host large numbers of refugees without being legally
obliged to. It would be an exaggeration to say the convention is
irrelevant, but not a wild one.

Whatever the convention’s shortcomings, many people are fleeing

real horrors. Take Sukra, a young woman who escaped Sudan’s civil
war. She recounts how gunmen burst into her house and murdered
her brother. An Arab militia ordered black residents like her to leave
the country immediately or be raped. Sukra fled on foot across the
desert to Chad, a country next door, part of a terrified crowd of
refugees dodging bullets in the dark. When she arrived, she realised
her sister had not made it. So she went back to find her, and was
raped at gunpoint by three militiamen. She never found her sister.

The vast majority of people like Sukra remain in the developing

world. Of the 123m people uprooted by conflict or terror, more than
half are still in their home country. The UN calls them “internally
displaced people” (IDPs). Among those who eventually cross an
international border (“refugees”), 67% go to a neighbouring country
and 73% remain in low or middle-income countries.

The reason is simple: distance. Most fugitives go as far as they must

to find safety and shelter, but little farther. Thus, refugees are
heavily concentrated in countries that border war zones. These
places are often poor. Chad is miserably so—yet surprisingly
welcoming to people like Sukra. It cannot realistically close its long,
porous border with Sudan and it would cost a fortune to try. Instead,
taking advice from donors, it lets refugees in, issues them with IDs
and lets them work. It hosts 1.3m of them: relative to its population,

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55 times as many as America; relative to its GDP, more than 5,000
times as many.

There has been no political backlash to speak of. Locals find the
refugees culturally familiar—many tribes and language groups
straddle the border. No one doubts that the new arrivals are fleeing
mortal danger. And no one imagines they are moving to Chad to
exploit its generous welfare system, because it does not have one.

Instead, they receive some basic help from donors, but largely
support themselves. Around Adré, a border town where perhaps
250,000 refugees live, Sudanese welders wield blowtorches,
seamstresses stitch clothes and cooks fry beignets. They are free to
move around in search of jobs, or to rent land, of which there is
plenty, to farm. Wages are low. Sukra earns 50 cents a day making
mud bricks by hand, a common occupation in Adré, since refugees
have sharply raised demand for housing.

Chad exemplifies one of the few positive trends for refugees. Old-
fashioned refugee camps, where residents are shut away for years
and forced to subsist on handouts, are gradually going out of
fashion. More host countries are making it easier for refugees to
work legally and to move around. Colombia handed out huge
numbers of work permits to Venezuelans after their country
collapsed into chaos. Kenya is letting a big refugee camp become a
formal town. However, some of the places that host the most
refugees and asylum-seekers, such as Iran, Turkey and Germany,
still make it hard to work legally.

Chad, a landlocked slice of the Sahel, has little in common with any
rich country. Yet the reasons Chadians tolerate refugees apply
equally elsewhere. Proximity helps a lot. Europeans are more
welcoming to Ukrainians than, say, Syrians, because Ukrainians are
culturally close, everyone knows they are genuine refugees and
Europe is the nearest place for them to flee to. Likewise, Colombians

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have generally welcomed Venezuelans, and Ugandans have let in
fugitives from neighbouring Congo.

It is much cheaper to help refugees in poor countries than in rich

ones. New York was recently spending $380 a night to house a
typical refugee family in a hotel; the UNHCR in Chad budgets less
than $1 a day per refugee to cover everything. Studies find that
refugees who travel only a short distance are more likely one day to
return home. Sukra says she would go back to Sudan “if there is
peace”. For these reasons, the world should try to help refugees as
close to home and as quickly as possible, argues Susan Fratzke of
the Migration Policy Institute, a Washington think-tank.

The debate in rich countries focuses on the tiny share of the

displaced who reach Europe or America, rather than the vast
majority who do not. This group tends not to be the most desperate:
people-smugglers are expensive, so only the better-off can afford
them. Illicit boat rides are risky; those who attempt them are
disproportionally young, male and healthy. A study of Syrian
refugees in 2015 found that those who made it only as far as Turkey
were a normal cross-section of Syrian society; those who reached
Europe were 15 times more likely to have a university degree.

Germany’s generous welcome of Syrian refugees in 2015 had

“deeply ambivalent consequences”, argue Messrs Collier and Betts.
Around a million people who had already reached safety in Turkey
were tempted to board risky boats and head for somewhere richer.
Thousands died. Those who reached Germany mostly prospered. But
the episode spurred a global backlash against refugees and
migrants.

There is no chance that rich countries will admit more than a small
fraction of the world’s refugees. If the aim of refugee policy is to
provide safety to all who need it, the focus will have to be on the
first safe places they reach. If those havens are far away and poor,
rich countries can fulfil their “duty of rescue” to more people by

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offering financial help in those places than by spending the same
money on asylum-seekers on their own territory. Rich countries
should not only defray the short-term costs of admitting refugees,
argue Messrs Collier and Betts. They should also offer carrots (such
as favourable trade terms) to persuade host governments to give the
new arrivals a path out of dependency. That means letting them
work or, if they used to run a business, making it easier to rebuild
that business in exile.

The rich world is starting to do some of these things, but not all.
Even as overall aid budgets dwindle, donors are prioritising
payments to the last countries migrants pass through before arriving
in the West. Europe has lent money to Turkey and showered cash on
North African states to stop people-smugglers from setting sail
across the Mediterranean, for example. However, aid to the conflict
zones from which refugees first flee has suffered. The UN’s budget
for humanitarian assistance in 2025 is only 15% funded. Mohamed
Refaat, the IOM’s chief of mission in Sudan, warns of an even bigger
exodus if the looming famine there is not checked.

There used to be an app for that

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Meanwhile, rich countries are making strenuous efforts to reduce the
incentive to show up and claim asylum. A year ago President Joe
Biden barred anyone who crossed America’s southern border without
permission from being considered for asylum. Instead, he told
migrants to apply from Mexico, using an app called CBP One, which
let them enter biometric data and book an appointment for an
interview.

This, plus a deal struck with Mexico, helped bring calm to America’s
southern border. Apprehensions there peaked at 300,000 in
December 2023 and have since fallen by 96% (see chart 3). Robert
Ardovino, a restaurateur in El Paso, Texas, says illicit migrants used
to cut through his fence all the time. Now, glancing at Border Patrol
helicopters circling Mount Cristo Rey, a former hotspot for crossings,
he says that “these guys have been bored” since last summer.

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Mr Trump tightened further, declaring a national emergency and
completely halting asylum applications at the southern border. On
July 2nd a judge ruled that he lacks the authority to do this. The
White House will surely appeal. “A marxist judge has declared that
all potential FUTURE illegal aliens on foreign soil (eg a large portion
of planet earth) are part of a protected global ‘class’ entitled to

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admission into the United States,” complained Stephen Miller, the
architect of Mr Trump’s anti-immigration policies, on X.

Other rich countries are edging away from “territorial asylum”—the

idea that people can apply for protection when they arrive. Australia
has long sent asylum-seekers to remote Pacific islands. Various
European governments are pondering schemes like the one blocked
by the courts in Italy, to send asylum-seekers to Albania.

Such initiatives should be legal, argues Michael Spindelegger of the

International Centre for Migration Policy Development in Vienna,
another think-tank. Albania is safe. Hearing cases there will deter
migrants whose cases are likely to fail from applying: they will not
have access to Italy’s labour market while waiting. Cases will be
heard by Italian officials; those granted asylum will be allowed to
come to Italy.

Rich countries are also getting more assertive about removing failed
asylum-seekers, even if their home countries do not want them
back. Ursula von der Leyen, the president of the European
Commission, has said the EU may limit visas for countries that do
not co-operate. Other governments have privately threatened to cut
development aid. Mr Trump, predictably, wields tariffs. In January he
menaced Colombia with 25% levies for refusing to accept deportees;
Colombia quickly caved.

Third country’s a charm

When repatriation proves impossible, more failed asylum-seekers are

being deported to third countries. On March 11th the EU proposed a
legislative framework to allow its members to build camps for failed
asylum-seekers in safe but unappealing third countries, and to keep
them there until they agree to go home. The Netherlands is
reportedly planning one in Uganda. Mr Trump emphasises
“unappealing” more than “safe”. He has sent allegedly criminal

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migrants to a brutal mega-prison in El Salvador and to war-torn
South Sudan.

The big question for reformers is how ruthlessly they should try to
disentangle asylum from labour migration. Rich countries with
ageing populations need extra hands and brains, and refugees need
jobs. But it does not follow that refugees are the workers that rich
countries most want. More likely, they will give work visas to the
people with the most desirable skills, not the saddest stories.

In theory, it would be possible to separate the two categories of

migrant almost completely. Suppose, for example, that rich countries
refused to consider any asylum claim from a migrant who arrives
without prior permission. (Unless, like Ukrainians, they are fleeing
from a war in the country next door.) Suppose, also, that rich
countries properly funded the UN-led system for coping with influxes
of refugees in the first safe country they reach.

If rich countries also wanted to host some refugees, they could

select some from those first safe countries, where their stories are
usually easier to check. Such a system would, in theory, offer safety
to those who need it. It would allow rich countries to manage labour
migration in a more orderly fashion, and so perhaps gain voters’
consent for a reasonably welcoming approach. It would be far from
perfect, but surely better than today’s mess. ■
This article was downloaded by calibre from
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Asia
Is Thailand heading for another coup?
Turning to sand :: The generals would be mad to try

How to ease pollution, gridlock and

honking on India’s roads
Street dreams :: The country’s elites won’t like it

Osaka’s World Expo is winning over grumpy

Japanese
Megashows :: The British food less so

Australia’s mushroom murderess is found

guilty
Murder she baked :: The trial, with a plot stranger than detective fiction, has gripped
the country

Mahathir Mohamad, the leader who

transformed Malaysia, turns 100
Banyan :: His vision for the country remains thankfully unrealised

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Turning to sand

Is Thailand heading for

another coup?
The generals would be mad to try
7月 10, 2025 07:13 上午 | Bangkok

GRIDLOCK IN THAI politics tends to end one way. Thailand is the

only middle-income country in which the armed forces regularly
seize power. There have been a dozen coups since the end of
absolute monarchy in 1932, two of them in the past 20 years.

Now Thais are asking if another putsch is on the cards. The

constitutional court on July 1st suspended the prime minister,
Paetongtarn Shinawatra, from performing her duties until it could
rule on a petition to remove her from office. That followed two other

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blows. On June 18th the second-largest party in her governing
coalition defected to the opposition, leaving it with a majority of six
in the 500-seat lower house. And on June 28th thousands of people
rallied in Bangkok to demand the prime minister’s dismissal (they are
pictured).

These events are giving some Thais déjà vu. Ms Paetongtarn’s

tycoon father, Thaksin Shinawatra, was removed in a coup in 2006.
Her aunt, Yingluck Shinawatra, was ousted by the courts in 2014; a
coup ensued two weeks later. Both moves followed adverse court
rulings, parliamentary gridlock and protests demanding that the
government be dissolved.

A new bout of instability is the last thing Thailand needs. President

Donald Trump wants to hit it with tariffs of 36%; Ms Paetongtarn’s
distracted government did not open negotiations with America until
the beginning of July, months after its foreign peers. Its export
industries are under pressure from lower-cost Chinese goods.
Tourism has been hit by tales of Chinese visitors being trafficked into
scam centres in neighbouring Myanmar. And in May, an old border
dispute with Cambodia roared back to life when a Thai soldier killed
a Cambodian sentry.

That border spat is the most immediate cause of Ms Paetongtarn’s

suspension. She had sought to resolve it by calling Hun Sen, the
former Cambodian prime minister (Mr Hun Sen handed the top job
to his son two years ago, but still pulls lots of strings). In a leaked
recording, Ms Paetongtarn was heard to criticise a Thai general
responsible for the border. Worse, to many Thais, she called Mr Hun
Sen “uncle”, a term of endearment in Asia. The petition before the
constitutional court to remove her from office argues that the call
violated (vague) ethical rules.

But anger at the Shinawatra clan has far deeper roots than this.
When Mr Thaksin first came to office in 2001 he sought to co-opt
the bureaucracy and agencies regulating his various companies.

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Media critical of this were banned. The king at the time obliquely
criticised these practices, setting the stage for a long-running feud
between Mr Thaksin and the monarchy, army and business leaders.

These elites hated the fact that Mr Thaksin’s populist movement

retained support among the rural poor, even after a coup removed
him from office. It won further elections in 2007 and 2011. On the
run from criminal charges filed against him while out of power, Mr
Thaksin chaired meetings of the cabinet that was nominally led by
his sister from 2011 to 2014. Her government sought to exonerate
Mr Thaksin—one reason she, too, was eventually ousted by the
elites.

The junta that took power in 2014 concocted a constitution they

hoped would keep Mr Thaksin’s movement out of power for good.
They reworked the electoral system to reduce the power of Mr
Thaksin’s supporters, who are concentrated in the north-east. But in
doing so they created an even greater threat to their interests. A
new liberal movement, now known as the People’s Party, got 18% of
the vote in 2019 and 38% in 2023. It has called for a crackdown on
monopolies, cuts to the army’s budget and reforms to rules against
criticising the monarchy. In 2023 it won the most seats in the lower
house elections, but Thailand’s unelected Senate, appointed by the
armed forces, blocked it from forming a government. Shocked by the
liberals’ rise, pro-military parties did something that had long
seemed unthinkable: they held their noses and teamed up with Mr
Thaksin’s Pheu Thai, the second-largest party in parliament, to
govern in a coalition.

As part of this rapprochement Mr Thaksin returned to Thailand from

self-imposed exile. The palace and the army were led to believe he
wanted to live a quiet life. In fact he has been busily reinserting
himself in Thai politics and foreign policy. This is too much for an
establishment that has fought him since the turn of the century; now
it is trying once again to eradicate his family’s influence. Last week,
Mr Thaksin went on trial for insulting the monarchy. And if the

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constitutional court eventually rules against his daughter, her
government is unlikely to survive.

Who would govern instead? Under Thailand’s eccentric constitution,

prime ministers may be picked only from a brief list of people whom
parties nominated before the most recent elections. Eyes are falling
on Anutin Charnvirakul, a tycoon who was once aligned with Mr
Thaksin. He now leads Bhumjaithai, the party that withdrew from
the ruling coalition last month. Mr Anutin may consider working with
anyone who can promise him more power. But his party would need
support from either Mr Thaksin or the People’s Party to hold a
majority in the lower house.

The leader of the People’s Party, Natthaphong Ruengpanyawut, tells

The Economist that he will back any prime minister who promises a
snap election. But the other parties all fear they will lose seats if that
happens. Mr Thaksin’s former backers are furious at him for doing a
deal with the generals. And conservatives are angry with the
military-backed parties for allowing Mr Thaksin’s movement back into
power.

Hence the worries about another coup. As things stand, the army
will probably have to choose between patching things up with Mr
Thaksin’s populists or trying to work with Mr Natthaphong’s liberals.
It is reluctant to do either. A dozen coups d’état have not yet
delivered a political system that makes the generals happy. That
does not mean they will not try again. ■
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Street dreams

How to ease pollution,

gridlock and honking on
India’s roads
The country’s elites won’t like it
7月 10, 2025 07:13 上午 | MUMBAI

AGAME OF I-spy involving only objects you can find in the middle of
a road in London would be rather short. The little eye would spy
motorised vehicles, cyclists and the occasional pedestrian (striding
briskly to the other side). The same game in Mumbai, however,
could take hours. Its carriageways are home not just to pedestrians
and parked cars but to utility boxes, construction debris, abandoned
roadworks, piles of garbage, makeshift shops, itinerant vendors,

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trees, cows, dogs and even places of worship. The Indian street is
an egalitarian place. It is also filthy, cacophonous and gridlocked.

The cost of this is high. Last year, three Indian cities—Kolkata,

Bangalore and Pune—made it to the top five in a global index of
congestion compiled by TomTom, a maker of navigation software
(see table). London ranked fifth, but it is deliberately making its
streets less friendly to cars.

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Average speeds that make glaciers look fast are only part of the
problem. India’s roads are dangerous, especially to pedestrians. Lots
of stopping and starting increases pollution: the contribution of
vehicles to Mumbai’s emissions doubled in the three years to 2020,
according to SAFAR, a government agency, in part because of
congestion. Improving roads would speed up travel, reduce noise
pollution, cut emissions and increase productivity.

Urban authorities know this. The problem is that they have tended
to respond by building more roads or by widening existing ones—
and these strategies have made things worse. New flyovers land at
bottlenecks. Pavements get torn up to create more road space, but
the trees and utility boxes that sit on them are often left in place,
turning carriageways into obstacle courses. Despite extensive road
widening, speeds in Mumbai fell by half between 2006 and 2016,
according to one study. “In any Indian city, what is marked as a
three-lane road is two lanes at best,” says Pritika Hingorani of Artha
Global, a policy shop.

Officials in a few places are finally forging a new path. Andhra

Pradesh, a southern state, is running a pilot programme in a pair of
its cities that involves setting up “clean-air zones” along the most
clogged and polluted arteries. It is building bypasses, but it is also
targeting congestion by rationalising parking and by prohibiting
heavy vehicles from using the roads at the busiest times of day.
Increasing speeds on just a few very busy roads can have a big
effect on how long it takes to get around a city, as well as on
pollution, says Ms Hingorani, whose outfit is working with the state
on the project.

Authorities in Bangalore have gone bigger. A decade ago India’s tech

capital had few pavements, little signage and no lane markings.
Since then, the city has overhauled many kilometres of inner-city
roads. It has buried pipes and wires in neat conduits; installed wide,
smooth pavements; and clearly marked out parking spots and lanes.
The number of people choosing to travel on foot in these areas has

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soared. So has satisfaction among drivers, surveys suggest. Several
other cities are planning to replicate the model, says Srikanth
Viswanathan of Janaagraha, a non-profit that designed Bangalore’s
standards.

Why is this not yet widespread? Money is part of the problem: for
the next phase of its overhaul, Bangalore is considering a cheaper
programme more focused on improving pavements. But politics is
key. India’s cities are run by unelected bureaucrats who serve for
just a few years. The real power resides at the state level. And those
politicians tend to be more focused on pleasing rural voters than
urban ones.

In addition, a small number of ornery road users wield outsize

power. India has only 34 cars for every 1,000 people; their owners
are unusually rich and privileged. These drivers tend not to favour
stricter rules or more parking fines. They reflexively oppose
schemes, such as bus lanes and cycle paths, that look like they
might cause inconvenience—even though these will eventually speed
things up. Authorities have to get motoring, regardless. If India
wants to get rich, it must fix the engines of its economic growth. ■

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Megashows

Osaka’s World Expo is

winning over grumpy
Japanese
The British food less so
7月 10, 2025 07:12 上午 | Osaka

It has got an eye on you

SEQUELS RARELY live up to the original. So said Japanese who

warned that the 2025 World Expo in Osaka, Japan’s second city,
might be a miserable failure. Cynics spied a bad cover version of an
epoch-making exhibition held in the same city in 1970. Yet now that
its doors are open, many grumpy Japanese are lightening up.

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The idea of pitching Osaka as the venue for this year’s expo was
floated by the Japan Innovation Party, a populist party rooted in the
region (World Expos, also known as “World’s Fairs”, are run roughly
every five years; the Bureau International des Expositions, a Paris-
based outfit, decides where they will be). The hope was of a big
boost to the local economy. And also that the event might help
Osaka wrest away at least a little of Tokyo’s outsize power and
prestige.

Nostalgia for past glories was important, too. Some 64m visitors—a
number roughly equal to half of Japan’s population, at the time—
flocked to the expo held in Osaka in 1970. They gawped at wonders
such as a moon rock, levitating trains and the first IMAX film. That
event happened to turn up at the height of Japan’s “economic
miracle”, a period of rapid growth. It helped show off the country’s
post-war rebirth and showcased its high technology.

This time around, the project faced opposition from the start. The
cost of constructing the park where the expo is being held doubled
from the initial estimate to ¥235bn ($1.5bn). Many Japanese believe
the area’s development is a pretext for building Japan’s first casino,
a controversial venture that is set to open on the same patch of land
by 2030.

Not long before the expo opened, a poll by Mainichi Shimbun, a

national newspaper, found that only 16% of respondents wanted to
visit. And in the first days of operation a clunky online registration
system, lengthy queues and expensive food boosted the doubters.
The café at the British pavilion got particular stick for its poorly
presented, overpriced afternoon tea. (At least that was authentic,
some said.)

Since then the mood has brightened. Some 160 countries have
created a pavilion or are maintaining some other kind of presence at
the show. From its opening in April to late June, it welcomed more
than 10m visitors. Officials say that on some days it draws more

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guests than Tokyo’s Disneyland. The hope is that it will have
attracted around 28m by the time its six-month run ends in October.
Myakumyaku-kun, the Expo’s deeply puzzling official mascot
(pictured), has proved an unlikely hit. Youngsters, in particular, are
snapping up merchandise featuring the unsettling creature. During a
visit to the White House earlier this year Akazawa Ryosei, Japan’s
chief tariffs negotiator, swapped a gold-plated money box featuring
Myakumyaku-kun for a MAGA hat.

Japanese are not very well-travelled. Only 17% of the population

has a passport. So although it is a long time since World’s Fairs
launched zingy new technologies, the Osaka event is scratching an
itch. Kiyokawa Rie, a 28-year-old visitor, says she was among those
who had wondered if the expo would have value. “But I think it
turned out great.” ■
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Murder she baked

Australia’s mushroom
murderess is found guilty
The trial, with a plot stranger than detective fiction, has gripped the
country
7月 10, 2025 07:13 上午

IT WAS AN easy slip-up. Anyone might buy a Sunbeam food

dehydrator to dry out the poisonous death-cap mushrooms they
have just foraged, keep the dried fungi in some Tupperware and
mistake them for the dried mushrooms they have bought from an
Asian grocery in Melbourne. The recipe for Beef Wellington called for
button mushrooms for the duxelle, the paste that goes between the
meat and the crust. But the ones bought from Woolworths proved a
bit tasteless, so it was natural for Erin Patterson to add some tangier

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dried ones. It was all, she said, a terrible accident. But it caused the
death of three family members of her estranged husband, Simon—
both his parents and his mother’s sister, whose husband survived.

On July 7th, after deliberating for a week at the end of a ten-week

trial in Morwell, a town east of Melbourne, a jury decided it was not
an accident at all. It found Ms Patterson guilty on three counts of
murder and one of attempted murder. The case has gripped
Australia, owing to its compelling mixture of tortured family drama
and—the jury has decided—an elaborate murder plot that would
have satisfied Agatha Christie.

Getting deserts

The Pattersons’ separation in 2015 had originally been fairly

amicable. But by the time of the fatal lunch in 2023 there was
acrimony over the schooling and maintenance of their two children.
That may have been why Simon Patterson refused the invitation to
the party. Ms Patterson told the other guests that she had invited
them in order to tell them of her diagnosis with ovarian cancer. This
was a lie, she explained to the court, to provide cover for weight-loss
surgery that she was planning.

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 Death en croûte

Ms Patterson had answers to explain many of the other odd aspects

of the lunch party. Why had she alone eaten off a smaller orange
plate, not the big grey ones she had given her guests? (It was not
true that the others had eaten off identical grey plates, as she didn’t
own four of them.) Why had she cooked individual portions of Beef
Wellington when the recipe prescribed the more usual version, with
a single beef “log”? (She couldn’t find an appropriate cut of meat.)
Some of her behaviour after the meal was even harder to explain:
she had dumped the Sunbeam dehydrator in a rubbish tip; it was
later found to have traces of death-cap mushrooms.

The wealth of evidence for spectators to chew over has made the
case irresistible to armchair detectives. Indeed, it is hard to think of
a trial that has so seized the Australian public’s attention since Lindy
Chamberlain was convicted in 1982 of the murder of her daughter,
whom she claimed had been taken by a dingo. Ms Patterson may
remember that Ms Chamberlain was fully exonerated in 1988, and
that in 2012 a coroner concluded the baby had indeed died in the
way her mother described. It may be weeks or even months before

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Ms Patterson is sentenced, after which she will be able to launch an
appeal of her own. ■
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Banyan

Mahathir Mohamad, the

leader who transformed
Malaysia, turns 100
His vision for the country remains thankfully unrealised
7月 10, 2025 07:12 上午

MAHATHIR MOHAMAD, Malaysia’s prime minister from 1981 to 2003

and again from 2018 to 2020, resembles other statesmen he
hobnobbed with back in the 1980s—such as Ronald Reagan,
Margaret Thatcher, Lee Kuan Yew and Deng Xiaoping. All of them
had distinctive policies; all presided over an economic
transformation; all were larger than life. Only Dr Mahathir, however,
is still alive, turning 100 on July 10th. He continues to wield

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influence, not just through his past achievements but as an active
dabbler in politics. Sadly, that influence is mostly baleful.

As prime minister for 24 of the past 44 years, Dr Mahathir is due

considerable credit for Malaysia’s economic success. In 1981 it still
relied heavily on commodity exports—first rubber and tin, industries
the British empire had nurtured, and then petroleum, timber and
palm oil. It is now a diversified manufacturing hub, with electronics
its most important export.

Dr Mahathir was often abrasive towards the outside world, but he

nevertheless welcomed foreign investment. He oversaw Malaysia’s
rapid integration into global supply chains and the building of
impressive infrastructure (as well as some expensive flops, such as a
national carmaker). GDP per person rose from about $1,900 in 1980
to about $12,500 last year.

His reputation for economic management was enhanced by his

unorthodox response to the Asian financial crisis of 1997-98. The
Malaysian ringgit plunged and the economy slumped, but Dr
Mahathir rejected IMF help. He imposed capital controls and pegged
the currency to the dollar. When Malaysia quickly recovered, he
could claim victory.

This record helps explain his enduring popularity. So too does his
image as a straight-talking man of the people—a doctor from
humble origins, willing to fight for the truth as he sees it. Hence his
remarkable comeback in 2018, when he joined his former deputy,
and later nemesis, Anwar Ibrahim, to topple another of his protégés,
Najib Razak.

Yet politically Dr Mahathir has left a largely toxic legacy. The issues
that have driven him have been the most sensitive in Malaysian
society: race and religion. (The concepts are inseparable in Malaysia,
as the constitution insists a Malay must be Muslim.) The
inflammatory book he published in 1970, “The Malay Dilemma”,

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castigated Malays, who then made up 56% of the population, for
accepting a second-class status. Farming and fishing were lazy
options that hampered the growth of the Malay community, he
argued. He supported the affirmative-action policies that favour
Malays over the Chinese and Indian minorities (then 34% and 9% of
the population respectively), whom Dr Mahathir throughout his
career has berated for perceived disloyalty to Malaysia.

In 1980 the ethnic-Chinese minority dominated business. The

attempt to redress this imbalance through affirmative action, with
lavish public funding for favoured Malay businessmen, had
predictable effects: a culture of corruption and cronyism that thrived
long after Dr Mahathir stepped down, culminating in the 1MDB
scandal, exposed in 2015, in which billions of dollars were stolen
from a sovereign wealth fund by well-connected insiders. (Mr Najib
is now in jail on related charges.)

Dr Mahathir can also be blamed for the weakening of some of the

institutions and people that might have provided better oversight
and accountability, including of himself. In the 1980s he engaged in
a series of confrontations: with the judiciary; the traditional
hereditary Malay rulers of nine of the country’s states; and his
political opponents, against whom he deployed an Internal Security
Act, bequeathed by the British, to arrest more than 100 politicians,
academics, activists and others in 1987. The trend was towards a
stronger executive branch, with weaker accountability.

Ironically, Dr Mahathir’s victory in 2018 at the head of a breakaway

party meant a first-ever electoral defeat for the United Malays
National Organisation, the party he did so much to build as a vehicle
for Malay political dominance. Worse, for Dr Mahathir, his coalition
was short-lived. He lost power in 2020 and saw Mr Anwar become
prime minister two years later.

Dr Mahathir fights on for his divisive vision of Malaysian society.

Surely it is too late for another comeback. But he remains an

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obstacle to the relaxed multicultural society Malaysia might become.
Impeding that progress may be his most lasting legacy. ■

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which brings together the best of our leaders, columns, guest essays
and reader correspondence.
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China
Why so many Chinese are drowning in debt
Left in the lurch :: Some contemplate suicide. Others vaunt their folly as influencers

China’s local governments are approaching

a fiscal black hole
Balancing the books :: Can provincial DOGE-ing help them avoid it?

America is coming after Chinese it accuses

of hacking
Cyber-spying :: Xu Zewei was arrested in Milan on July 3rd

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Left in the lurch

Why so many Chinese are

drowning in debt
Some contemplate suicide. Others vaunt their folly as influencers
7月 10, 2025 07:13 上午 | HANGZHOU

THE RISE of a property-owning, entrepreneurial middle class in

China has transformed its cities in this century. It has helped to spur
consumption in the world’s second-largest economy. In May retail
sales grew by 6.4% year on year—the fastest pace since December
2023—helped by state subsidies aimed at reviving consumers’
enthusiasm. The government has even cautiously promoted
borrowing in past years. But all this has created new risks. Along
with car-jammed streets, glitzy restaurants and vast malls has come
an invisible change that is no less great: soaring household debt.

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As a proportion of China’s GDP, household debt has risen from less
than 11% in 2006 to more than 60% today, close to rich-country
levels. Lenders include state-owned banks and tech platforms.
Between 25m and 34m people may now be in default, according to
Gavekal Dragonomics, a research consultancy. If those merely in
arrears are added, the total could be between 61m and 83m, or 5-
7% of the total population aged 15 and older. In both categories,
these numbers are twice as high as they were five years ago, the
firm reckons. Amid high youth unemployment and a property slump,
things may only worsen.

Dealing with personal debt remains shameful and unfamiliar in

China. But the government is struggling to help. It is already busy
tackling debt throughout the system: local-government debt remains
painfully high, and corporate debt uncomfortably so. Household debt
is one more worry. It is not an imminent threat to financial stability.
But it weighs increasingly heavily on the minds of middle-class
people, inhibiting their spending and undermining a belief in ever-
rising prosperity that the Communist Party sees as crucial to keeping
its grip on power.

Chinese households have a buffer: overall, their savings relative to

disposable income were nearly 32% in 2023, according to JPMorgan
Chase, a bank. That is far higher than the rate of less than 3% in
America in the build-up to the global financial crisis in 2007. But in
the boom years money borrowed for housing seemed like a one-way
bet, especially as jobs were plentiful and secure. People grew
accustomed to splashing cash from big online lenders such as Alipay
and WeBank. Others borrowed to invest in family firms. Then came
zero-covid lockdowns in 2020 and the start of the property crash the
year after. Whatever the origins, debt trouble and interactions with
cuigou, or “pressure dogs” (aggressive debt-collectors), have been
the fate of many.

Start with property. Borrowing for housing made up 65% of

household loans last year (excluding loans for business purposes).

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Most mortgage lending is done by government-owned banks, which
have to be careful about how they get their money back from those
unable to pay. The number of foreclosed residential properties listed
for auction last year was 366,000, slightly up from 364,000 in 2023,
according to China Index Academy, a private research firm. The
number of people failing to pay their mortgages may be growing
much faster. Regulators are wary of aggressive repossessions
involving people’s primary homes: they worry about triggering public
protests. Banks may be mulling another problem. In today’s
depressed market, auctioning a property may not recoup the
mortgage. Online lenders, which provide a more modest share of
mortgages, can be far tougher about repayment.

Spendthrifts are another group in trouble. Lily, a millennial in

Shanghai, got into debt when her employer, a software firm, stopped
paying her wages because of its own cashflow difficulties. She owed
30,000 yuan ($4,200) to online lenders. To help, she is dabbling in
“debt IP”—when people turn stories of ruin into a means of
generating cash as online influencers. She describes her travails in
short videos on social media, but hasn’t hit the big-time. Some of
the most popular accounts have hundreds of thousands of followers.
“Some people are even competing: ‘Oh, I’m 10m in debt, I’m 100m
in debt,’” she says.

Now consider investment debt. In Hangzhou, Ms Bai used to run a

big education business and took out personal loans of millions of
yuan to invest in it. Many Chinese borrow to boost family-owned
firms and lenders often require personal guarantees, putting
households at risk if the ventures fail. At its peak, her business
organised cramming classes for between 50,000 and 60,000
students at 30-odd tutoring centres, generating an annual revenue
of 100m-200m yuan. Then came covid-19 and a political crackdown
on crammers. She had to sell her house and car to pay the debt.

Dealing with the banks was the easy bit, however. During the
pandemic the government urged them to be gentle with debtors

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whose businesses had been affected by it; they agreed to waive tens
of thousands of yuan in interest. The tough part was dealing with
the pressure dogs hired by online lenders from whom she had
borrowed money for personal use. They repeatedly called Ms Bai,
her friends and her relatives, often from different phones so they
could not be blocked. She is particularly angry about the harassment
of her parents. “In China”, she says, “we generally don’t tell our
parents about bad news, so they were very, very affected.” Ms Bai
became depressed and thought of suicide. Her husband divorced
her.

Regulations relating to the debt-collecting industry are new and

patchily enforced in China. Rather than helping Ms Bai, a court put
her on a “social credit” blacklist, which meant she could no longer
fly, use high-speed trains or stay at luxury hotels. So where can
debtors find relief? Support groups for them have been growing
online. Jiaqi Guo of the University of Turku in Finland has been
studying one of them, called the Debtors Alliance, on Douban, a
social-networking site. Founded in 2019, it now has more than
60,000 members. Dr Guo says users often discuss shesi, meaning
“social death”. It refers to the destruction of relationships caused by
“contact bombing”, as the debt collectors’ phone calls are described.

The government has tried to show a modicum of sympathy. Last

year it banned debt-collection agencies from threatening violence,
using abusive language or calling people at anti-social times. It also
reminded lenders to protect personal information (presumably
meaning stopping misusing contact details). But data-privacy
regulations are loosely enforced in China. Complaints on the debtors’
forum suggest little change in the collectors’ threatening and
intrusive behaviour.

One reform that might help is a personal-bankruptcy law, of the kind

found in rich countries, to protect debtors from claims that would
leave them destitute. The lack of such legislation has fuelled the
growth of online loan-sharks offering high-interest credit to

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desperate defaulters. In 2021 Shenzhen became the first city to
introduce a bankruptcy law for individuals. But it has been used with
caution. By the end of September 2024 more than 2,700 people had
applied for bankruptcy protection under this law, but courts had
accepted only about 10% of their cases. A few other places have
been dabbling in similar schemes. But the government appears in no
hurry: creditors are often big state firms. Officials worry that a
national law might signal tolerance of reckless spending or
speculative investment. ■

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to understand what the world makes of China—and what China
makes of the world.
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Balancing the books

China’s local governments are

approaching a fiscal black
hole
Can provincial DOGE-ing help them avoid it?
7月 10, 2025 07:13 上午 | BEIJING

UGLY NUMBERS lurk in the books of China’s local governments. An

annual audit released on June 24th showed that over 40bn yuan
($6bn) of state pension funds were misappropriated last year in 13
of 25 provinces looked at. (There may be more dodgy practices but
the auditors only have the resources to focus on certain bits of the
country each year.) Among other things, the money was used to
repay government debts. Another 4bn yuan was lifted from a

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programme to pay for refurbishing schools. And billions more were
diverted away from farming subsidies. Local officials “are always
stealing our money”, said one angry commenter on Weibo, a social-
media platform. “It’s like trusting the mice to look after our rice,”
wrote another.

In truth, local officials are motivated more by desperation than

greed. Across provinces, counties and cities, they are responsible for
the bulk of government spending. But much of China’s tax revenue

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flows instead to the central government. Local officials used to be
able to raise more funds by selling land to developers. But a
property slump since 2021 has slashed that source of revenue. Past
splurges on infrastructure, meanwhile, have left many governments
with huge “hidden” debts, usually within semi-commercial firms
known as local-government financing vehicles (see chart). The IMF
estimates that such firms sit on 66trn yuan of debt, equivalent to
about half China’s annual GDP.

China’s central government has little sympathy for what it regards as

fiscal irresponsibility. It hopes that with better budgeting local
governments can manage to cut waste at all levels (and so avoid
dipping into the pension pot in order to make ends meet). That is
why central authorities have been trying harder since 2024 to
expand a reform known as “zero-based budgeting”. This requires
officials to justify each item in their sprawling budgets (ie, to start
from zero) every year. That is in contrast to the current approach,
where spending is typically carried forward from a baseline that is
set the year before.

In theory, zero-based budgeting should help clear up all sorts of

problems. It might prevent companies from being subsidised by
multiple agencies at once—a common result of splashy industrial
policies—as duplicated spending would be more obvious. It could
also help eliminate so-called zombie policies, which continue to be
funded after the need for them has passed. And it should make it
harder to swipe from government coffers without being noticed.

Pilot schemes have shown some promising results. In Zhengzhou, a

city in central China, officials said they recovered 3bn yuan after
implementing zero-based budgeting. In the southern region of
Guangxi, officials said they found 18bn yuan of idle funds. In March
Deqing, a county in Zhejiang on China’s eastern coast, claimed it had
slashed its budget for government projects in half by ditching certain
projects and merging others. Officials in one department realised
that a propaganda campaign to praise the government’s agricultural

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policies duplicated another’s. They combined the two (no doubt to
the relief of local farmers).

In Anhui province, in China’s east, bean-counters claim to have

saved 21.6bn yuan since 2022 by nixing hundreds of projects.
Before zero-based budgeting, different departments often
implemented schemes without even trying to co-ordinate, admitted
Zuo Zizhi, an official in Anhui’s finance department, in a report by
state television last year. “The transport department might build
roads in the west, the water department might dig canals in the
east…then the housing department might build cities in the
north...they all say that their tasks have been completed, but when
you look at the reality, there is no result.” Mr Zuo and his colleagues
were also “stunned” to find eight overlapping schemes all trying to
fund innovation, according to the report.

Cutting government spending across the board will be significantly

harder—just look at the travails of the Department of Government
Efficiency in America. So all this might sound rather too good to be
true. Still, there is little doubt that China’s local governments could
be less wasteful. In March, during his annual report to the country’s
rubber-stamp parliament, the prime minister, Li Qiang, promised to
support officials in their efforts to take zero-based budgeting
nationwide.

The process could prove painful. Yang Zhiyong of the Chinese

Academy of Fiscal Sciences, a think-tank under the finance ministry,
has said it will require “turning the knife inward” and “biting the hard
bones”. So it is not surprising that, whereas almost every province
has promised to review its spending, so far only a handful have set
proper plans for doing so all the way down to the county level.
Those that have, like Zhejiang, tend to be the ones with relatively
healthy books already. Guizhou, a south-western province with fiscal
woes so serious that staffers in the central government jokingly refer
to it as “Greece”, is a laggard.

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Given the scale of local governments’ difficulties, the central
government may have to help out more at some point. In November,
the finance ministry allowed them to issue extra bonds worth trillions
of yuan to replace their riskier hidden debts. But so far China’s
central authorities have been rather reluctant to offer further
support, for fear of encouraging more irresponsible borrowing. In
the long run, reforms are under way to shift tax revenues from the
central government towards local ones, although the process is
expected to take years. Until then, officials must budget better to
balance the books. ■

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makes of the world.
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Cyber-spying

America is coming after

Chinese it accuses of hacking
Xu Zewei was arrested in Milan on July 3rd
7月 10, 2025 07:13 上午

FOR OVER a decade, America’s justice department has been

indicting Chinese government hackers. Almost all of them have
remained beyond the reach of the law. The aim has been to expose
and embarrass, rather than to arrest. Now that is changing. On July
3rd Italian police in Milan arrested Xu Zewei, who is alleged to have
worked on behalf of the Shanghai branch of the Ministry of State
Security (MSS), China’s main spy agency. America wants to extradite
him for wire fraud, identity theft and hacking.

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America says that Mr Xu worked for Shanghai Powerock Network Co.
Ltd, a mysterious company whose anodyne name concealed its role
in hacking for the MSS. Mr Xu, working as part of a larger group
dubbed Hafnium, allegedly hacked into American universities in 2020
and 2021. The targets were institutions where immunologists and
virologists were conducting “ground-breaking” research into covid-19
vaccines during the pandemic. He did so by exploiting weaknesses in
Microsoft servers for handling emails. (Mr Xu denies wrongdoing and
claims he was a semiconductor technician on an Italian holiday.)

Mr Xu is not the first alleged Chinese spy to be caught in America’s

legal net. In 2022 a federal court in Cincinnati sentenced Xu Yanjun,
a career intelligence officer in the MSS, to 20 years in prison for
stealing commercial secrets and technology from American aviation
companies. That Mr Xu was lured to Belgium in an FBI sting
operation in 2018, arrested there and sent to America. But this was
largely for traditional human espionage—one of Mr Xu’s agents
successfully joined the US Army, among other spying capers. The
new case is the first involving purely cyber activity. “Xu Zewei
violated a golden rule of hacking,” notes James Lewis, a cyber
expert, “which is never visit a place where a warrant can be served.”

It also highlights the pivotal role of China’s private sector, which

serves as a force multiplier for Chinese spy agencies at both the
national level and, curiously, the provincial level. Firms like Shanghai
Powerock Network either hack directly or provide tools and services
to enable hacks by others. In March America’s government charged
a dozen Chinese “contract hackers” and officials, many of whom
were associated with i-Soon, a prominent company which has been
linked to large-scale intrusions around the world.

A report published on July 8th by Kieran Green of Margin Research,

an American cyber-security firm, describes a sprawling “cyber militia”
of civilian volunteers who train alongside the People’s Liberation
Army. China’s government offers tax breaks, procurement
preferences and public recognition to encourage top cyber-security

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firms and their staff to participate in the scheme. A “vast and
growing ecosystem” sees these militia-linked cyber-operators
scattered across state-owned companies, universities and tech firms.
“These partnerships blur the line between state and private cyber-
capabilities,” concludes Mr Green. That all suggests that Mr Xu will
not be the last Chinese hacker to be indicted by America. But he
may well be among the last to take a holiday in Europe. ■

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to understand what the world makes of China—and what China
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accuses-of-hacking

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United States
ICE’s big payday makes mass deportation
possible
Cold as ICE :: What the controversial agency will do with even more funding

What goes on in America’s immigration

courts
Immigration court :: A dispatch from the elevator bank of the 12th floor of 26 Federal
Plaza

What went wrong in the Texas floods?

Hell country :: DOGE may not have been to blame but local politicians have a case to
answer

Jeffrey Epstein is still causing trouble for

Donald Trump
Conspiracy catnip :: His administration cannot shake rumours of a cover-up—in part
because MAGA types enthusiastically endorsed it

The Big Beautiful Bill will kill one profession

Know when to fold :: Professional gamblers get beaten by the odds

American men are hungry for injectable

testosterone
Hormonal men :: A legion of new health clinics are serving it up

What Donald Trump owes William F.

Buckley
Lexington :: Just about everything

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Cold as ICE

ICE’s big payday makes mass

deportation possible
What the controversial agency will do with even more funding
7月 10, 2025 07:13 上午 | LOS ANGELES

FOR MORE THAN a month Los Angeles has been subject to

countless immigration raids. Certain places are regular targets: car
washes, Home Depots, bus stops, street markets. One video taken in
the Ladera Heights neighbourhood shows federal agents pinning
Celina Ramirez to a tree. They are wearing bullet-proof vests, masks,
hats and sunglasses to hide their faces, and guns strapped to their
sides. Ms Ramirez had been selling tacos near a Home Depot. The
agents shove her into a van, deploy tear gas at onlookers who were
recording the encounter, and race off. She was probably taken to the

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basement of the federal detention centre, where troops are still
stationed outside.

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The raids in LA are a prelude to an era of increased immigration
enforcement. The One Big Beautiful Bill Act (BBB), signed by
President Donald Trump on July 4th, will pour roughly $170bn into
strengthening border security and ramping up deportations. The
biggest beneficiary is Immigration and Customs Enforcement (ICE),
which will receive nearly $75bn over four years (see chart 1) for
everything from new detention facilities to more agents and better
technology. That is more money than the annual budgets for nine
federal law-enforcement agencies combined. Mr Trump’s deportation
demands and the BBB funding will allow ICE to become the best-
resourced, most aggressive version of itself. In an interview with The
Economist, Tom Homan, Mr Trump’s border czar, calls it “a game-
changer”. Carrying out 1m deportations a year has never looked so
achievable.

But David Bier of the Cato Institute, a think-tank, reckons that the
immigration provisions in the bill will cost $1trn more than the
Congressional Budget Office suggests, owing to the need to continue
to pay all those new agents and maintain the bigger border wall
beyond 2029. Deporting immigrants who paid more in taxes than
they received in benefits only adds to the cost. “This is war-like
levels of funding,” he says.

Congress’s inability or unwillingness to reform America’s broken

immigration system has meant that its enforcement arm has grown
—becoming more visible and more militarised. “ICE has emerged as
one of our main forces for regulating the mobility of people in the
developing world,” says Austin Kocher of Syracuse University. How
did that happen? For 70 years the Immigration and Naturalisation
Service (INS) handled everything from visa processing and asylum to
deportations. Doris Meissner, who led the INS under Bill Clinton,
reckons that there are two moments integral to understanding what
ICE has become. The first was the passage of an immigration law in
1996 that expanded the list of crimes that made someone
deportable and created mandatory detention for certain migrants.
The agency came to depend on private prisons. Ms Meissner wrote a

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memo outlining which migrants the INS would pursue (criminals),
and which might be left alone (veterans).

The second moment Ms Meissner points to is the break-up of the

INS after 9/11, and the creation of the Department of Homeland
Security (DHS) and ICE within it. America increasingly viewed
immigration through a national-security lens, rather than a civilian
law-enforcement one. ICE’s initial struggles were between its
immigration and customs officials, who competed for top jobs and
prestige. But as illegal border crossings increased in the mid-2000s
the agency became synonymous with its immigration mission. ICE,
like the INS before it, was “la migra”.

The shift increased tensions within the agency, specifically between

ICE’s enforcement division (ERO) and its investigative one (HSI),
which delves into weapons smuggling and human trafficking. HSI
agents see themselves as detectives, notes one former DHS official,
and ERO as jailers. ICE officials blame Congress’s inaction for its
unpopularity. But the American left increasingly viewed the agency
itself as toxic. During Mr Trump’s first term “abolish ICE” became a
rallying cry for progressives, and the question of whether to
restructure the agency was a litmus test in the 2020 Democratic
presidential primary. But when illegal border crossings surged and it
became clear that this was in fact a problem, the slogan looked
wildly out of touch.

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The BBB’s passage marks another transformative moment for the
agency. “This funding is going to give us thousands more beds,
which means we arrest thousands more people,” says Mr Homan,
who led ICE during part of Mr Trump’s first term. Arrests are already
climbing. Stephen Miller, the president’s deputy chief of staff and the
architect of his immigration policy, wants ICE to arrest 3,000 people
a day. In early June the agency was averaging roughly 1,100,
according to the Deportation Data Project, a group that collects
immigration statistics (see chart 2). Mr Homan and DHS insist that

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the administration is prioritising criminals and national-security
threats. But the pressure to ramp up arrests is leading to
indiscriminate round-ups of day labourers and taco-sellers. An
analysis of the Deportation Data Project’s figures by Mr Bier suggests
that nearly half of the migrants arrested during the first week of
June had no criminal record.

During Mr Trump’s first term, he binned the kind of enforcement

priorities that Ms Meissner had first put in place back in the 1990s.
But ICE didn’t have the resources to go after both criminals and
farmworkers, so deportations remained relatively low. The BBB
allows ICE to work on finding gang members while also going after
grandmas who came to America from Mexico decades ago.

When Mr Trump took office, there was a long list of obstacles that
made mass deportations unlikely. There weren’t enough ICE agents,
detention beds or airplanes to arrest people, then house and return
them. The courts moved slowly and had a tremendous backlog.
Some countries didn’t want to take back their citizens. BBB helps
with the logistical problems. Stripping migrants of the temporary
legal status conferred by the Biden administration makes the pool of
potential deportees larger. And closing court cases and sending
people to places they did not come from sidesteps the legal and
diplomatic roadblocks.

Do any barriers remain? Sanctuary states and cities are still blocking
ICE from accessing jails and prisons, the easiest places to pick up
undocumented migrants who have committed crimes. “We don’t
have that problem in Florida because Governor [Ron] DeSantis has
passed a law that sheriffs must work with us,” explains Mr Homan.
“So we’ll take those available resources from Florida and we’ll put
them in New York and other sanctuary cities.” Mr Homan suggests
that allowing ICE access to jails means fewer agents on the streets,
but also promises that no one is “off the table”.

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It will also take time for ICE to recruit and train up new agents.
“Mass hiring is like mass deportation,” says Bo Cooper, a former
general counsel for the INS. “It’s easier said than done.” Several
former ICE and DHS officials reckon it could take anywhere from a
few months to up to two years to get more agents on patrol. Mr
Homan is making contingency plans. The BBB includes funding to
help train local law enforcement agencies to work with ICE,
supplementing its staffing levels. Mr Homan also wants to hire
contractors to do paperwork, freeing up employees with “badges
and guns” to pound the pavement.

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As ICE arrives in more communities, the agency will become more
controversial. A majority of Americans support deporting violent
criminals, but they also back allowing migrants who came to the
country as children or who arrived many years ago to stay. The
agency has already lost support since the beginning of Mr Trump’s
term: 42% of Americans polled by The Economist and YouGov
viewed ICE favourably in mid-June, an eight percentage-point drop

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from February (see chart 3). Meanwhile, support among Republicans
increased by nine points.

Mr Homan, former ICE officials, pro-immigrant activists and

academics all warn that the risk of violence will increase. Mr Homan
blames protesters. “I’m afraid someone is going to get hurt,” he
says, if “an officer feels his life is in danger, he may have to use
deadly force”. He takes no responsibility, however, for the
administration’s fiery rhetoric (last month Mr Homan warned the
governor of California that he could be arrested). Protesters blame
ICE. At a recent rally at a Home Depot on the south side of LA, one
protester declared that “the raids are going to stop when we kick
their asses out of Los Angeles.” Rushing new agents through training
won’t help; past hiring surges within the Border Patrol have
coincided with more allegations of excessive force.

ICE agents themselves are not all happy warriors. One former ICE
official argues that working for the agency means angering half of
the country all of the time. At headquarters, DHS leaders force
employees to take polygraph tests if they are suspected of leaking to
the media. Several career bureaucrats worry that the laser focus on
immigration enforcement is detracting from counterterrorism, drug-
smuggling or child-pornography investigations. Some are retiring
early. “It’s very funereal most days,” says one former DHS official. “I
think what’s happening at the department is making America less
safe.” ■

Stay on top of American politics with The US in brief, our daily

newsletter with fast analysis of the most important political news,
and Checks and Balance, a weekly note from our Lexington
columnist that examines the state of American democracy and the
issues that matter to voters.
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states/2025/07/07/ices-big-payday-makes-mass-deportation-possible

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Immigration court

What goes on in America’s

immigration courts
A dispatch from the elevator bank of the 12th floor of 26 Federal
Plaza
7月 10, 2025 07:13 上午 | NEW YORK

The face of the law

“MOVE, MOVE, MOVE!”, cried a federal agent as officers huddled

around an asylum seeker who had just left his immigration hearing.
Moments earlier the agents’ phones had beeped and vibrated. They
had received a photo of the next person they were to detain. They
walked to the elevator bank. A couple of agents held the elevator
doors open. The migrant was shaking. He was one of at least 23
people detained by ICE on a recent Tuesday in New York City.

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Detentions at immigration court rose fast about six weeks ago. At
first it was people whose asylum cases were dismissed who were
detained. Having a case dismissed used to be a good thing. It meant
the next stage of the immigration process could begin outside the
court system. Now, dismissal could mean rapid deportation. Many of
those now being detained by federal agents had just been given
court dates by the judge, which means they have a temporary right
to be in America.

Most of the federal agents cover their faces with masks or

balaclavas. They are in plain clothes, with most wearing a vest in
black or army green that says “POLICE FEDERAL AGENT” or
“BORDER PATROL”. A few have ICE shields on their belts. One says
that they are from different federal agencies and have been
deployed to New York from elsewhere.

“Today is not a good day,” says Benjamin Remy, a lawyer with New
York Legal Assistance Group (NYLAG), a charity. It was a Thursday
and the third day in a row of mass detentions. “We’ve never seen
this. These judges have never seen this. Court staff has never seen
it.” He says due process is being ignored.

Migrants are moved quickly and often to different detention centres

round the country, making it hard for people to communicate with
loved ones and with lawyers. Melissa Chua of NYLAG says that her
clients are disappearing from the system. “These are people who
have valid claims for asylum,” says Ms Chua. “They’re trying to do
the right thing. It shouldn’t require an army of lawyers to get them
out of detention. They’re not a flight risk, they’re not a danger to the
community.”

Children look on fearfully. One New York police officer, who said he
voted for President Donald Trump, cried when his friend, a Haitian
immigrant, was detained and whisked away. Agents surrounded a
married couple, detained the woman and released her husband. He
was shaking. He said they both had hearing dates for 2026. ■

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Stay on top of American politics with The US in brief, our daily
newsletter with fast analysis of the most important political news,
and Checks and Balance, a weekly note from our Lexington
columnist that examines the state of American democracy and the
issues that matter to voters.
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states/2025/07/10/what-goes-on-in-americas-immigration-courts

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Hell country

What went wrong in the

Texas floods?
DOGE may not have been to blame but local politicians have a case
to answer
7月 10, 2025 07:12 上午

LONG BEFORE the sun rose the waters came rushing. Heavy rain
swelled the rivers of Texas’s hill country until they burst their banks,
drowning people, cars and trailers before dawn on July 4th. Greg
Abbott, Texas’s governor, announced five days later that the storm
had killed 109 people and that 173 are still missing. More than two
dozen of the dead are children and counsellors from Camp Mystic, a
Christian summer camp for girls whose cabins dotted the bank of the

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Guadalupe River. As ground crews comb the mud for bodies, many
people are asking the same question. What went so terribly wrong?

Officials in Kerr County, where most of the deaths took place, were
quick to blame the National Weather Service for issuing warnings
that were too little too late. Yet meteorologists say that the forecasts
were good, perhaps even unusually good given the information they
had. The Trump administration fired most probationary staff at the
weather service earlier this year, but that did not hinder Texas
weather offices’ ability to forecast the storm, says Tom Fahy of the
National Weather Service Employees Organisation, a union. Offices
in nearby San Antonio and San Angelo were well-staffed and
communicated with local officials throughout the night. The
warnings went out in all of the affected areas at least one hour—and
in some three or four hours—before the rivers surged. “This was the
best that science would allow,” says Daniel Swain, a climate
researcher at the University of California, Los Angeles.

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It was not enough. Rainfall was concentrated in what the county’s
top elected official calls America’s “most dangerous river valley”.
Thunderstorm clouds dropped 12 inches of rain over a ten-square-
mile zone where two rivers prone to flash floods meet. The
Guadalupe rose by 29 feet in under three hours (see chart). The
storm was deadlier because it struck in the middle of the night on a
holiday weekend, when people were asleep by the water.

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The “last mile” of communication—what happens after the weather
service warns of dangers—failed miserably. In 2017 Kerr County
considered building its own flood-warning system, but decided it was
too costly. That is not unusual for a rural place with small
government and little access to capital, says Avantika Gori, an
environmental engineer at Rice University. But for years state
politicians refused to help, even as the risk of floods rose.

The Texas Division of Emergency Management, which was tasked

with allocating $100m in federal funds for disaster preparation after
floods killed 20 Texans in 2016, twice denied the county’s request for
$1m to upgrade its water gauges and sensors, and to create an
online alert system. Although the state’s water board recommended
$54bn of state funds for flood control across Texas over a year ago,
lawmakers have so far only allocated $669m. This spring the Texas
senate nixed a bill that would have paid for warning sirens and given
grants to the most flood-prone places. The House member who
represents Kerr County now regrets voting “no”. The lieutenant
governor, who runs the Senate, wants the state to pay for sirens
along the river by next summer.

Sirens may have saved more people, but a Kerr County meeting
record shows that years ago taxpayers wanted to invest in alert
systems instead, which they didn’t end up getting. “Flashing lights or
barricades or sirens” are more useful for “tourists” like the campers,
they reckoned, who are “not familiar with the area and wouldn’t
know what to do”. After a 1987 flood that killed ten campers in the
same area the federal government installed radio towers to spread
warnings on walkie-talkies. Those messages were sent out, but they
were not effective.

The girls had gone to bed after the weather service said flash floods
were likely. Later the weather service sent screeching alerts to
people’s phones but some residents say they never received them
because of spotty reception; others probably slept through them.
Some locals had opted out of the state’s emergency warning system

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entirely before the storm, annoyed by the volume of “blue alerts”
about police officers being shot across the state, often hundreds of
miles away. Emergency responders worry about warning fatigue.

Today one in six Texans lives or works in a flood hazard area and
soon more will. Flash-flood alley, the winding strip of land that the
storm ravaged, and Harris county, home to Houston, a city known as
the country’s flood capital, are gaining more people than anywhere
else in the state. As the low-lying plains become more inhabited—
and climate change brings more unpredictable storms—Texas’s
politicians will have to plan better. On Tuesday Mr Abbott said that
asking who is to blame for the deaths is “the word choice of losers”.
Nevertheless the governor has called lawmakers back to Austin to
investigate. ■

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newsletter with fast analysis of the most important political news,
and Checks and Balance, a weekly note from our Lexington
columnist that examines the state of American democracy and the
issues that matter to voters.
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Conspiracy catnip

Jeffrey Epstein is still causing

trouble for Donald Trump
His administration cannot shake rumours of a cover-up—in part
because MAGA types enthusiastically endorsed it
7月 10, 2025 07:26 上午

ONE OF DONALD TRUMP’S superpowers is saying something one

moment, contradicting it the next and convincing most of the MAGA
faithful that he has never changed his position. Other members of
his administration do not possess this power, which is why they are
struggling to deal with a right-wing furore surrounding the late
Jeffrey Epstein. Before joining the government, a number of high-
ranking officials claimed that the deep state was withholding
explosive information about Epstein, a convicted paedophile, and his

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links to important people. Now that they are the state, they have
had to admit it is all nonsense. On July 7th the Department of
Justice (DoJ) said there was no secret information to release. But
nothing convinces a conspiracy theorist of a cover-up like saying
“nothing to see here”.

The Epstein affair had the hallmarks of a conspiracy theory. He was

a rich financier with a Jewish surname and powerful acquaintances,
including Bill Clinton, a former president, and Prince Andrew, a
British royal. He was also a paedophile whom the state treated
leniently. In 2008 he pleaded guilty to soliciting prostitution and
soliciting a minor for prostitution. He was sentenced to 18 months in
prison but served less than 13, during which he was outside the
prison walls six days a week to work. Allegations that he brought
children to his private island using a jet known to the press as the
“Lolita Express” kept the grim gossip mill turning. The chatter among
conspiracy theorists reached a new level when, in 2019, Epstein
hanged himself in prison. He had been awaiting a new trial on
federal sex-trafficking charges.

The conspiracies mainly focused on two things: whether Epstein had

actually been murdered and whether he had a “client list”—a “Who’s
Who” of paedophiles at the top of society. Information about both,
claimed conspiracists, was being suppressed by the state. Future
members of the Trump administration encouraged and even
engaged in these speculations. In 2021 J.D. Vance, now the vice-
president, implied that the government was protecting Epstein’s
“clients”. Kash Patel, now head of the FBI, told Congress in 2023 to
“put on your big-boy pants” and release the list. Mr Trump himself
implied that Mr Clinton was tangled up in the Epstein affair.

Some of this talk continued even after Mr Trump was elected for the
second time. In February Pam Bondi, the attorney-general, claimed
to have Epstein’s client list “sitting on my desk right now”. She made
a big show of inviting MAGA social-media influencers to the White
House to receive “The Epstein Files: Phase 1”. Little in the

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documents was new. The administration and the influencers were
roundly mocked by other conspiracy theorists. Ms Bondi blamed the
FBI for withholding documents. She continued to advertise grand
revelations. In May she spoke of a previously unheard of stash of
“tens of thousands of videos of Epstein with children or child porn”.

As a result, when the DoJ announced that, actually, there was no

“client list” and that Mr Epstein killed himself, much of the internet’s
ire was directed at Ms Bondi. A number of faithful Trump supporters
have called for her to be fired, including Laura Loomer, a far-right
media personality with the president’s ear. And the government’s
denials have only fuelled more Epstein conspiracy theories.

A few people—including Elon Musk, the president’s former adviser

and “first buddy”—have claimed that the government is not releasing
more documents on Epstein because Mr Trump’s name is in them.
Mr Trump’s ties to Epstein are well known: they first met in the
1980s and have been neighbours, friends and rivals. The president’s
superpower has come in handy amid the saga. In 2002 Mr Trump
thought Epstein was a “terrific guy”; in 2019, after Epstein was
arrested, the president said he “was not a fan”.

Mr Trump might still worry that, if attention is drawn to his

relationship with Epstein, it will damage his reputation with his base.
The president seems eager to put it all in the past. “Are you still
talking about Jeffrey Epstein?” he asked on July 8th, in response to a
reporter’s question directed at Ms Bondi. “Are people still talking
about this guy, this creep? That is unbelievable.” Perhaps if members
of his own administration had not already spread so much nonsense
about Epstein, the din wouldn’t be so loud. ■

Stay on top of American politics with The US in brief, our daily

newsletter with fast analysis of the most important political news,
and Checks and Balance, a weekly note from our Lexington
columnist that examines the state of American democracy and the
issues that matter to voters.

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Know when to fold

The Big Beautiful Bill will kill

one profession
Professional gamblers get beaten by the odds
7月 10, 2025 07:13 上午

Wager killer

THE REPUBLICANS’ sprawling new tax-and-spending law affects

every industry. But a seemingly modest clause deep in its 330 pages
is poised to wipe out one line of work entirely: professional
gambling.

The provision reduces the share of wagering losses that are tax
deductible from 100% to 90%. For sports bettors, who earn slim
margins on large volumes, this change is catastrophic. One

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prominent gambler known as Jack Andrews explains that he is on
track to have $7.7m in winning wagers and $7.3m in losing ones. If
he can deduct only 90% of $7.3m, he would have to report $1.13m
of “phantom” income, and would owe roughly $340,000 in federal
tax on his $400,000 profit. The change can even hurt losing
recreational players. If you win a $10,000 casino jackpot but
surrender $10,500 on the rest of your play, you would still be taxed
on $550 despite losing $500.

The clause’s origins are mysterious. It first appeared in an

amendment from the Senate Finance Committee. Multiple
Republican committee members have said they do not know how it
got in, although the $1.1bn of revenue it is predicted to generate
may have been needed to comply with Senate rules on skirting the
filibuster. Dina Titus, a Democratic representative from Nevada, has
already secured Republican co-sponsors for a bill reversing the
measure. The American Gaming Association also supports repeal.
Nonetheless, there are no guarantees that Congress will act before
the change takes effect in 2026. “Nobody opposes a tax on winning
gamblers, because they’re not a winning gambler,” Mr Andrews says.
“It’s tough to have sympathy if you don’t have any empathy.”

Bettors can still deduct losses from wins within a single session of
play. But the Internal Revenue Service (IRS) is unlikely to let punters
treat a full year, or arguably even a week, as one session. In the
meantime, some sports bettors are placing their hopes on a
potential loophole presented by a disruptive new entrant to the
industry.

Last year a federal court allowed Kalshi, a platform that lets users
bet against each other on whether a stated event will occur, to offer
markets on elections. Three days after Donald Trump’s inauguration,
the site opened markets on sports as well. It has reason to be bold:
Donald Trump junior is a strategic adviser, and Brian Quintenz—Mr
Trump’s nominee to lead Kalshi’s regulator, the Commodity Futures
Trading Commission—sits on its board.

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More than $1bn has already been bet on Kalshi’s sports contracts,
which are available even in states that have not legalised sports
betting. The stock-trading platforms Robinhood and Webull offer its
markets. And Kalshi claims that, unlike sportsbooks, it does not have
to comply with states’ regulations or pay them taxes.

Seven states have ordered it to close these markets for their

residents. However, Kalshi has won injunctions in New Jersey and
Nevada preventing enforcement while courts consider the case,
arguing that derivatives exchanges are federally regulated and
beyond the reach of state law.

The courts may eventually side with the states. And even if Kalshi
prevails, any victory may be pyrrhic, because gambling firms would
open their own prediction markets to shield revenue from state
taxation. FanDuel, America’s largest sportsbook, has already
expressed interest.

Kalshi is only a partial substitute for sportsbooks. It does not offer

markets on scoring differentials or player statistics, or let traders
combine bets into parlays. And it is of use to “top-down” punters,
who compare sites to find mispriced odds, only if they can bet
elsewhere without prohibitive taxation. But it does have one big
advantage: the IRS has not ruled on whether prediction markets
count as gambling.

If pork-belly traders can net out wins and losses, why not football
bettors? The agency might look askance at established gamblers
shifting their income classifications abruptly. But without IRS
guidance, says Russell Fox, an accountant, taxpayers can do
anything reasonable, defined as having at least a 40% chance of
success. It is a good bet that professional gamblers, who make their
living by estimating such probabilities, will take those odds. ■

Stay on top of American politics with The US in brief, our daily

newsletter with fast analysis of the most important political news,

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and Checks and Balance, a weekly note from our Lexington
columnist that examines the state of American democracy and the
issues that matter to voters.
This article was downloaded by calibre from https://www.economist.com/united-
states/2025/07/10/the-big-beautiful-bill-will-kill-one-profession

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Hormonal men

American men are hungry for

injectable testosterone
A legion of new health clinics are serving it up
7月 10, 2025 09:12 上午 | ATLANTA

Joe says it is so

ARE YOU struggling to be the man you were always meant to be?
You might have low testosterone. Walk into Gameday Men’s Health
clinic and you will find yourself in their “man cave”, a waiting-room
decked out with black leather armchairs, televisions and a well-
stocked fridge. A nurse practitioner will do a blood test and check if
your testosterone levels are normal. If you are indeed deficient—or if
you’re technically not but you’re experiencing symptoms of
exhaustion, depression or trouble putting on muscle and having

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stamina during sex—they can inject you with your first dose of
testosterone within the hour. Refer a friend for $50 off your next
weekly treatment.

The Gameday clinic in the ritzy Buckhead neighbourhood of Atlanta,

Georgia, opened in April last year as the company’s 50th franchise.
In the 14 months since, another 325 have been launched across the
country. This represents a burgeoning American health trend.
Between 2019 and 2024 prescriptions for testosterone jumped from
7.3m to 11m. In Texas, the hub for testosterone-replacement
therapy (TRT), a medical treatment that artificially increases
hormone levels and Gameday’s most popular service, there were
more scripts filled in the final quarter of last year than in all of 2021.
Because hormone levels naturally fall as people age, middle-aged
men inject it at higher rates than anyone else. But the demographic
group that is taking to it fastest is men under the age of 35.

Like many wellness fads, the testosterone craze aims to fix a real
medical problem. There is some evidence that men today, on
average, have lower testosterone levels than men did decades ago,
thanks to higher rates of diabetes, obesity, opioid use and more
exposure to environmental toxins. That makes them feel lousier than
they ought to. According to Mohit Khera of Baylor College of
Medicine in Houston, 92% of men with low testosterone suffer from
depression and a simple blood test can change their lives for the
better. Hypogonadism·, the condition, too often goes undiagnosed.
Injections can dramatically improve mood, sleep and libido and
reduce body fat. Clever entrepreneurs, like Casey Burt of Gameday
Buckhead, reckon that the market is still partially untapped: doing
away with the stigma around sexual health will reveal more patients
who genuinely need care.

Its loudest proponents, however, are not doctors. Joe Rogan,

America’s top podcaster, touts it to his 20m listeners as a way
to help men feel younger. Dax Shepard, an actor and podcaster, says
that “heavy testosterone injections” helped him gain 24 pounds of

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muscle. “I spent my whole life as a medium boy and now I’m a big
boy and I like it,” he says. (Because it is a steroid that very
effectively improves athletic performance, testosterone is banned in
most professional sports.) Buff gym-bros and “biohackers” inject
themselves on TikTok while telling their audiences that they should
be on “T” even if their doctor disagrees. This fits with the Make
America Healthy Again movement, which has made distrust of
conventional medicine conventional. Indeed Robert F. Kennedy
junior, the health secretary, has set aside his habitual scepticism of
injections to go on TRT as part of an “anti-ageing protocol”.

According to the American Urological Association, a quarter of the

patients receiving TRT last year did not have their testosterone
levels checked before starting treatment. Of those who were given
TRT, a third were not in fact testosterone deficient. Akanksha Mehta,
a doctor at Emory University, says she turns away almost 50% of the
men who come asking for it; Gameday treats almost everyone.

How bad is it for people who don’t need testosterone to be on it?

Compared with other drugs it is relatively safe, as long as it is not
taken in body-building doses. A big clinical trial published in 2023
found that taking testosterone does not increase the risk of prostate
cancer or heart attacks, as was thought. But it can cause infertility, if
another hormone is not given alongside it. Doctors often see young
men who come in at “supraphysiological” levels who do not know
that they have made themselves infertile. “There is a lot of anger,”
says Ms Mehta. Mr Khera, the Houston doctor, reckons that in most
cases he can restore fertility back to 25% of a patient’s baseline. But
“when someone drops down that low it can be an issue”, he says.

The men’s clinics also vary in their quality of care—and the quality of
drugs. Online retailers like Hone, Hims, Maximus and DudeMeds do
not require in-person check-ups and often get patients hooked on
subscriptions. Some clinics require multiple diagnostic blood tests,
following medical standards; others do not. Gameday aims to
“optimise” how men feel, and argues that men within the normal

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range can still benefit from treatment. Many clinics, with exceptions
like the Low T Center chain in Texas, get their testosterone supply
from compounding pharmacies rather than pharmaceutical firms.
That means that the drugs are cheaper—TRT is rarely covered by
insurance—but also not approved by the government’s Food and
Drug Administration. Compounded testosterone is more likely to be
contaminated and can fluctuate in potency per dose. Getting the
safest stuff has also become harder. Pfizer, a big domestic supplier,
recently reported a shortage of testosterone due to rising demand.

The majority of testosterone businessmen your correspondent spoke

to said that they were doing things right, but others were dragging
the industry into shady territory. Mr Burt of Gameday Buckhead says
that making money from people’s health, as all ordinary doctors do,
is in itself “an ethical balancing act” but that “doesn’t mean we
should be more criticised than any other profession”. Like ketamine,
testosterone is a Schedule III drug with a robust black market. In
recent years customs agents have seized large caches of it at
America’s borders. “There is a massive demand and it’s going to get
met,” Mr Burt explains. It’s just a matter of whether it’s met at a
clinic or at the gym. ■

Stay on top of American politics with The US in brief, our daily

newsletter with fast analysis of the most important political news,
and Checks and Balance, a weekly note from our Lexington
columnist that examines the state of American democracy and the
issues that matter to voters.
This article was downloaded by calibre from https://www.economist.com/united-
states/2025/07/08/american-men-are-hungry-for-injectable-testosterone

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Lexington

What Donald Trump owes

William F. Buckley
Just about everything
7月 10, 2025 07:13 上午

FOR ALL the thunderbolts Donald Trump let fly to frighten

Republicans into blessing his gassy tax-and-spending bill, his most
illuminating gesture in the months-long drama was also his most
timid. In May the president meekly posted on social media that he
“and all others” would “graciously accept” a tax increase on the rich.
Republicans should “probably not do it”, he added, passive-
aggressively, “but I’m OK if they do!!!”

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Mr Trump wrote that Republicans were wrong to fear that Democrats
would gain from accusing them of breaking a promise not to raise
taxes. He clearly saw that raising taxes on the rich would instead
make sense to his MAGA masses and also strip Democrats of one of
their few remaining salient attacks. As he told Time magazine in an
interview earlier this year, if he raised taxes on millionaires, he would
be taxing the wealthy “to take care of the middle class”. He added,
“I love that.”

Mr Trump’s populist politics, and the contortions they create for his
party, are often treated as a new phenomenon in American politics.
In fact, they are the latest expression of a decades-old identity crisis.
That becomes clear when Mr Trump’s “One Big Beautiful Bill Act” is
considered alongside this summer’s other monumental new text,
also of about 1,000 pages but of wildly superior quality: “Buckley:
The Life and the Revolution that Changed America”, a biography of
the conservative crusader William F. Buckley by Sam Tanenhaus. As
far back as the 1960s, well before Buckley helped elect Ronald
Reagan as the embodiment of his anti-statist, low-tax vision, he was
struggling with how to reconcile those positions with the class
politics, and dependence on government programmes, of the voters
emerging as the Republicans’ core constituency: the “forgotten
Americans”, a term, like so much else, that Mr Trump has lifted from
politics past.

The Republicans are now in the grip of an ego more super even than
Buckley’s. But the party’s id remains Reaganesque, as demonstrated
by Mr Trump’s timidity about tax increases, his regressive tax cuts,
and his breezy assurances that growth will cover their debt-defying
cost. But while orthodox Republicans under Reagan tried to simplify
the tax code, dangling before forgotten Americans the hope they
might get rich someday, Mr Trump’s populists have cluttered the
code with breaks for favoured constituencies such as workers who
depend on tips.

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Never-Trump conservatives who see themselves as Buckley’s heirs
may bridle at the observation, but though Buckley was no populist,
he augured Mr Trump. Not really a journalist or theorist, Buckley was
a “performing ideologue”, Mr Tanenhaus writes, early to recognise
“that politics was becoming a large public spectacle”. His only fear
was being bored, and he had an instrumental approach to fact. He
applauded bullies such as the red-baiting Senator Joe McCarthy
when they were on his side. In the biography the single mention of
Mr Trump is telling: he and Buckley both gave testimony on behalf of
Roy Cohn, the ravening lawyer who was McCarthy’s chief counsel,
when he unsuccessfully fought disbarment for grievous misconduct.

Like Mr Trump, Buckley was a fierce culture warrior, and to his last
days he saw campuses as the most important ideological battlefields.
It seemed to be a joke when Buckley ran for mayor of New York in
1965 as the Conservative candidate, to steal votes from a liberal
Republican. But his celebrity, sophistication about television, and
willingness to say just what he thought made him popular as a kind
of anti-politician. His fulmination about crime and esteem for the
police drew support from Democrats as well as Republicans. He
came in third, but no less a light than Richard Nixon saw him as a
grave threat who could shift the party radically to the right. Over the
next decade Buckley did just that.

When the masses were revolting

The book of theory Buckley never managed to write was to be called

“The Revolt against the Masses”, and for years he favoured denying
black Americans, among others, the vote. His discomfort with
democracy made a poor match with populism. Moreover, although
the cultural elite never embraced Mr Trump the populist (“I’ll never
have the goodwill of the establishment, the tastemakers of New
York,” he groused back in his days as a developer) they toasted
Buckley the conservative. His books were serialised in the New
Yorker and he had his own show, “Firing Line”, on public television,

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of all places. Of 1,505 episodes, his proudest was in 1978, when he
debated Reagan over the Panama Canal treaty. Reagan, with his
populist instincts, opposed it for the same reasons Mr Trump would
one day demand the canal back. But Buckley, magisterially, wanted
to know if America would take human rights and sovereignty
seriously, or be distracted by “the irrelevance of prideful exercises,
suitable rather to the peacock than to the lion”.

That is what most separates the old Buckley conservatives from the
new Trumpist populists. In his heyday Buckley had a great cause,
opposing communism. Anti-statism and free-market economics
rhymed with that purpose. While the collapse of the Soviet Union
was good for humanity, it was terrible for the coherence of American
politics. Like tax cuts for the rich, free-market principles linger in Mr
Trump’s party mostly as muscle memory.

The president calls himself a conservative, but taxes trade on a

whim and requires businesses and universities to conform to his
politics. He has seized a “golden share” in US Steel that gives him
authority over its means of production. Yet, because the old labels
have an atavistic power, he delights in calling the new Democratic
nominee for mayor of New York “a pure, true communist”, though he
is really just the latest social-media avatar of the other party, which
has forgotten history, lost its grasp on the present, and chosen to
dwell in a utopian future. But that is another column. ■

Subscribers to The Economist can sign up to our Opinion newsletter,

which brings together the best of our leaders, columns, guest essays
and reader correspondence.
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states/2025/07/10/what-donald-trump-owes-william-f-buckley

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The Americas
Inside the secret military dialogue between
Britain and Argentina
Game of southern cone :: A deal would counter China and please America. It requires
deft diplomacy on the Falklands

Brazil is bashing its patron saint of the

environment
A losing battle :: Congress is bulldozing environmental laws. Marina Silva wants to
stop it

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Game of southern cone

Inside the secret military

dialogue between Britain and
Argentina
A deal would counter China and please America. It requires deft
diplomacy on the Falklands
7月 10, 2025 07:13 上午 | MONTEVIDEO

AMERICA’S TOP brass worries about the South Atlantic. It is a

jumping-off point for Antarctica, where Russia and China boast 15
bases between them, scrambling to lock down resources. It is linked
to the Pacific by the Strait of Magellan, the only safe maritime route
between the two oceans other than the drought-hit Panama Canal.
Traffic through the strait is surging, as is illegal Chinese fishing on

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either side. China is pushing infrastructure projects across the
region. America’s top generals have visited Argentina’s deep south
three times in the past two years.

At first glance the United States is well positioned to manage any

threat. President Javier Milei of Argentina is a hyper-willing ally.
Britain has Typhoon fighter jets and the HMS Forth patrol vessel
stationed in the Falkland Islands. But Argentina’s armed forces are in
bad shape. Britain’s are focused on defending the Falklands from
Argentina: Britain has sovereignty over the islands, but Argentina
claims them. As a legacy of the Falklands war in 1982, Britain has
tight restrictions on weapons sales to Argentina. These have
hamstrung the latter’s efforts to improve its armed forces and
prodded it towards buying Chinese planes and weaponry, alarming
America.

Now a mix of factors, including Mr Milei’s unusual perspective on the

islands and American enthusiasm for modernising Argentina’s armed
forces, have created an opening for a new strategic arrangement in
the South Atlantic. Quietly, after a long hiatus, dialogue between the
Argentine and British defence ministries has restarted. Argentina
wants Britain to loosen its restrictions on arms purchases. Britain
wants discreet acceptance of its role in the rest of the South Atlantic,
even while Argentina maintains its constitutional claim over the
Falklands. Britain also wants Argentina to work with it on practical
matters to improve life for the Falklanders.

The warming began in February 2024, a few months after Mr Milei

took office. British defence attachés visited the ministry of defence in
Argentina for the first time in three years. In September that year
the British and Argentine foreign ministers met and arranged a visit
by Argentines to family members’ graves on the Falklands. They also
agreed to share fisheries data and to restart monthly direct flights to
the islands from Argentina. Defence dialogue then accelerated. An
Argentine delegation visited London in January. A British one is
expected to visit Buenos Aires.

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Mr Milei wants to modernise his country’s armed forces with the best
NATO-compatible equipment. He is cutting government spending
savagely, but raising the defence budget from 0.5% of GDP to 2%
over the next seven years. Last year Argentina applied for NATO-
partner status.

Britain is interested in a deal, too, but is cautious. It shares

American concerns about the South Atlantic. Argentina’s de facto
acceptance of Britain’s relevance in the region would facilitate closer
co-operation on everything from science to security, not just with
Argentina but also with its neighbours, Chile and Uruguay. But
although the Argentine families visited in December, Argentina has
not yet shared fishing data or restarted flights, stepping stones to
progress on arms policy. The islanders are wary. “We feel very
secure,” says Leona Roberts of the Falklands’ Executive Council. “But
we would probably not be wildly comfortable with the UK supplying
military equipment to Argentina.”

Britain has long blocked sales of military equipment with British

components to Argentina, even by third countries. Given the
strength of Britain’s arms industry, this has been a serious
constraint. In 2020 it blocked the sale of South Korean fighter jets
with some British parts. The stated policy is to block sales that could
“enhance Argentine military capability”. Yet there is wriggle room.
Britain may allow sales that are not “detrimental to the UK’s defence
and security interests”. A first step could be to interpret that clause
more flexibly.

The shape of things to come

There are several reasons to believe a new arrangement is possible.

Few consider Argentina a real threat to the Falklands. “It’s militarily
unthinkable…[Britain] would wipe us off the planet,” says Alejandro
Corbacho, a military historian at the University of CEMA in Buenos
Aires. Britain seems more willing to reconsider its restrictions if
Argentina planned to make large purchases, as that would boost

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Britain’s defence industry. If so, that would suggest the embargo is
more about politics than protecting the Falklands. Britain knows its
restrictions are anyway losing bite as more countries make military
kit.

The fact that the United States wants a new arrangement matters
too. In public statements it has offered “steadfast” support for the
modernisation of Argentina’s armed forces. In private, one American
with knowledge of the matter calls Argentina “a huge partner” with
an army “in very sore need of equipment and training”. But that
equipment must be Western, not Chinese. Britain’s embargo makes
that harder. Continued intransigence could end up bolstering those in
a post-Milei government who believe Argentina’s future, in weaponry
and politics, runs through China rather than the West.

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Argentina’s dalliance with America’s adversaries is real. Mr Milei likes
trading with the Asian giant. In 2023, before he took office, a
Chinese firm looked set to build a large port near the Argentine

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entrance to the strait. That project collapsed amid intense objections
both foreign and domestic, but China, which operates a space
station in Patagonia, remains keenly interested in the region. Under
the last administration Argentina was “gnat’s-ass close to buying
Chinese fighter aircraft”, warns the American. In 2021, weeks before
the invasion of Ukraine, the previous government signed a deal with
the Russian ministry of defence allowing Argentine officers to travel
to Russia for training.

During Joe Biden’s presidency the United States pushed Britain to let
Argentina buy modern F-16 fighter jets with a British-made ejector
seat. Britain was reluctant and an alternative was found. Argentina
bought older F-16s from Denmark with $40m of American money.
These did not have British parts, so British approval was not
required. However, the Americans still sought to justify it to Britain,
which accepted it. That was progress. “The US government was also
interested in whether the broader export controls could be ended,”
says an American former official. A spokesperson for Britain’s
government says it has “no current plans to review the UK’s export-
control policy for Argentina”.

But it is easy to imagine Britain’s position shifting. The Trump

administration is pushy, ignores orthodoxy and is close to Mr Milei,
whose pro-Western stance probably helps Britain to be flexible. His
conciliatory tone and taboo-breaking on the Falklands is crucial. He
openly admires Margaret Thatcher, who led Britain during the
Falklands war. He admits that the islands “are in the hands of the
UK” and says that Argentina will not try to retake them by force.
Recently he even seemed to imply that the islanders have a right to
self-determination, Britain’s position.

Domestic politics remain a formidable barrier in both countries.

Argentina appointed a new foreign minister in October. Despite
enthusiasm in other parts of government, better ties with Britain
seem less of a priority for the new man. For its part, Britain worries
about who comes after Mr Milei. Selling arms to a Milei-led Argentina

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may be fine, but he will leave office in 2027 or 2031. An attempt in
2016 to reset relations was torn up when the left-wing Peronists
returned to power. It would be embarrassing to help Argentina
modernise its armed forces only for that to happen again.

In both countries the flag-waving opposition could paint an

agreement as a retreat and use it to whip up anger. In Britain, Nigel
Farage’s Reform UK party is surging in the polls and could easily
pressure the government over any new arrangement, perhaps
framing it as a betrayal of the British war dead. In Argentina the
Peronists have already attacked Mr Milei for his stance on the
Falklands. With midterm elections in October, he and his team may
prefer to steer clear of the issue for now.

Yet the overriding thrust of Mr Milei’s foreign policy is airtight

alignment with America, notwithstanding trade with China. Britain
has a similar, if less absolutist, tradition. The Trump administration is
so exercised about Chinese influence in Latin America that it
threatens to seize the Panama Canal. It is clear about the threat
posed in the South Atlantic, too. If it pushes harder, its two allies
may draw a similar conclusion—and act accordingly. ■

Sign up to El Boletín, our subscriber-only newsletter on Latin

America, to understand the forces shaping a fascinating and complex
region.
This article was downloaded by calibre from https://www.economist.com/the-
americas/2025/07/06/inside-the-secret-military-dialogue-between-britain-and-
argentina

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A losing battle

Brazil is bashing its patron

saint of the environment
Congress is bulldozing environmental laws. Marina Silva wants to
stop it
7月 10, 2025 07:13 上午

Silva needs no mansplaining

WHEN MARINA SILVA resigned as Brazil’s environment minister in

2008, she was an international rock star. Deforestation in the
Amazon had plummeted by 50% during her five-year tenure. She
had been showered with awards and included on lists of influential
thinkers. She was also admired for her tenacity. Brought up poor and
illiterate as one of 11 siblings on a rubber plantation, Ms Silva went
on to graduate from university, be elected as Brazil’s youngest

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senator and forge Brazil’s climate policies. Even her resignation, in
protest at large infrastructure projects in the Amazon, seemed to
bolster her integrity.

Now Ms Silva is under attack in Brazil. Having returned to the helm

of the environment ministry in 2023, on July 2nd she was
summoned before a committee in the lower house of Congress to
testify about deforestation. Lawmakers hurled insults at her for
almost seven hours. They called her “inelegant” and “a disgrace”,
compared her to terrorists and told her to resign. In a previous
exchange, senators had told her she “should know her place” and
that she did not deserve respect.

Such chauvinist language is nasty, and reflects the state of

environmental discourse in Brazil today. Since Ms Silva’s last stint in
office, Congress has become both more powerful and more beholden
to agribusiness and fossil-fuel lobbyists. The government of
President Luiz Inácio Lula da Silva (known as Lula) is desperate for
cash. As his relationship with lawmakers sours, he is increasingly
loth to stand in their way.

Those attacking Ms Silva want to pass a bill that would dismantle

many of Brazil’s environmental regulations. It would exempt
infrastructure, mining and farming projects that have a “small or
medium-size impact” from having to carry out an environmental-
impact assessment, putting them on a fast track instead. In some
cases developers would be allowed to judge the impact of their own
works. Projects the government deems strategic would automatically
qualify for simpler licensing. The World Wide Fund for Nature, a
charity, calls it “the biggest setback in Brazilian environmental
legislation in the last 40 years”. A final vote on the bill could come as
soon as July 16th.

The impulse to simplify Brazil’s licensing laws is reasonable. The

country has 27 states and over 5,000 municipalities, which
sometimes enforce their own rules. This is a pain for businesses that

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operate across different regions. Yet the proposed law would gut
environmental protections and offer new avenues for corruption.
“Just because a project is deemed strategic for the government does
not mean the environmental impact disappears,” says Ms Silva. It
could also create legal uncertainty. Brazil’s top court has ruled that
projects with a medium-size impact should not qualify for fast-track
licensing. Flávio Dino, a judge on the Supreme Court, has said he
expects the bill to be contested.

That the bill could pass while Lula is president frustrates

environmentalists. He took office in 2023 promising to tackle the
illegal ranchers, loggers and miners that proliferated under Jair
Bolsonaro, his far-right predecessor. He beefed up IBAMA, the
environmental regulator. Deforestation fell. In November he will try
to bolster his credentials when Brazil hosts the COP30, the UN’s
annual climate conference. Lula “will need to make a choice between
his environmental promises and pleasing Congress”, says Marcio
Astrini of the Climate Observatory, a network of charities in Brazil.
“He can’t have both.”

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Three forces are undermining Ms Silva. The first is that Congress has
become emboldened. In the past decade Brazil’s legislature has
given itself vastly greater spending powers. In 2015 lawmakers’
amendments to discretionary spending in the federal budget, which
amounts to some $40bn a year, represented less than 2% of the
total. Today such “earmarks” account for a quarter of non-
mandatory spending—far higher than the average in the OECD, a
club of rich countries. Representatives demand pork in exchange for
backing laws. In June a bill that will regulate offshore wind energy
only passed in Congress after lawmakers forced Lula to include
unrelated subsidies in the draft.

As it has gained power, the composition of Congress has shifted

rightwards. Though Mr Bolsonaro lost the presidential election in
2022, his party and centre-right groupings swept the legislature. The
rural caucus now comprises almost two-thirds of lawmakers in both
houses. The lobby is particularly strong at a local level. Lawmakers
in Mato Grosso, Brazil’s soyabean heartland, are trying to have parts
of the state reclassified as tropical savannah instead of Amazon. This
would let farmers raze 65% of trees on their land, instead of only
20%. Governors elsewhere are gunning for looser licensing laws.
This would allow for the completion of the BR-319, a once-
abandoned 900km (550-mile) highway that cuts through pristine
jungle. Lula has promised to finish much of the road by the end of
his term.

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Brazil’s oil lobby has also gained clout. Prospectors believe the
country’s northern coastline is rich in crude oil, in an area called the
Equatorial Margin (see map). But because it lies near the mouth of
the Amazon river, IBAMA has prohibited drilling there. Lula and
several of his ministers want to exploit it, and think the licensing law
could help. If this happened, Brazil could become the world’s fourth-

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largest producer of crude by 2030, up from seventh today. On June
17th the national oil agency put 172 exploration blocks up for
auction, including some near the Amazon basin. The government
plans to offer more oil concessions this year, which it hopes will raise
some $4bn.

The final obstacle is the government’s fragile finances. The IMF says
public debt is on course to hit 92% of GDP this year, up from 60% in
2013. Much of this borrowing happened under Lula’s predecessors.
Yet he is not helping. Without accounting trickery, the government
will miss its fiscal goal of reaching a primary surplus of 1% by 2026.
Lula has ramped up social spending and raised the minimum wage.
The Senate is set to approve his plan to exempt people who earn up
to 5,000 reais ($920) a month from income tax. That will cost
around $5bn a year in lost revenue. Easy oil money is thus
particularly appealing.

Every cloud

And so Brazil’s environmental movement is squeezed. Yet Natalie

Unterstell of the Talanoa Institute, a think-tank in Rio de Janeiro,
sees a silver lining. Only 34 of the 172 blocks put up for auction
found takers. Even the union of oil workers did not back licensing
sites near the mouth of the Amazon river, which Brazil’s public
prosecutor tried to suspend. Mr Astrini is blunt. If the licensing bill
passes, “We will not stop fighting for the environment. We will just
hire more lawyers.” ■

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Middle East & Africa

Ending the war in Gaza is still fiendishly
difficult
An elusive ceasefire :: Donald Trump and Israel’s generals are pressing Binyamin
Netanyahu to make a deal

Hamas looks close to defeat

At its lowest ebb :: If there is another ceasefire in Gaza, it may not be able to regroup
as before

Donald Trump’s approach to Africa is very,

well, African
Trumpafrique :: What a meeting with five leaders says about his administration’s
interest in the continent

Got an enemy? Hire a killer

Assassin’s creed :: In South Africa, contract murders are spreading from gangland
into wider society

Congo’s football diplomacy

Unlikely partners :: What is the point of the country’s sponsorship deal with AC Milan?

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An elusive ceasefire

Ending the war in Gaza is still

fiendishly difficult
Donald Trump and Israel’s generals are pressing Binyamin
Netanyahu to make a deal
7月 10, 2025 07:13 上午 | JERUSALEM

EARLIER THIS week hopes for an imminent end to the war in Gaza
were at their highest in months. As Binyamin Netanyahu, Israel’s
prime minister, touched down in Washington on July 7th, talks to
finalise a ceasefire agreement had already begun 11,000km away in
Qatar. President Donald Trump had told reporters he would be “very
firm” with his guest in getting him to accept a deal.

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But after two meetings between the two men at the White House, a
resolution to the war that began more than 21 months ago remains
elusive. At the time of writing Israel and Hamas, the Islamist
organisation that controls parts of Gaza, were still struggling to
reach an agreement on how Gaza will be run after the war, which
has devastated the coastal strip and killed more than 57,000 people.

Read all our coverage of the war in the Middle East

They have agreed in principle on the framework. During a 60-day

truce, half of the estimated 50 Israeli hostages still held in Gaza,
some 20 of whom are believed to be alive, would be released in
exchange for more than 1,000 Palestinian prisoners. During the
same period there would be talks aimed at a permanent ceasefire.
But a number of details are still in dispute.

Chief among these is Mr Netanyahu’s insistence that “Hamas will not

be [in Gaza]” once the war is over. Hamas appears open to
discussing a new “technocratic” government in Gaza, of which it will
not officially be a member. Israel is demanding that Hamas, which
triggered the war in October 2023 when it attacked southern Israel,
agree to full disarmament and the exile of its surviving leaders.
Hamas, for its part, wants Israel to let in more aid and provide
guarantees that the ceasefire will permanently end the war.

Before leaving for Washington, Mr Netanyahu presented a plan to his

cabinet that he said was intended to further Israel’s aims of
destroying Hamas. The idea is to force nearly a third, at first, of
Gazans into a corner of southern Gaza that has already been largely
destroyed by Israel. Those entering the zone, where food would be
distributed, would be searched for weapons and screened for Hamas
membership. Meanwhile Israel could continue to search and destroy
the depopulated areas. The plan passed unanimously, despite
opposition from the chief of staff of the Israel Defence Forces (IDF)
and the government’s own legal advisers, who argue that such a
project would constitute a war crime.

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Some government insiders believe the plan is supposed to increase
pressure on Hamas and placate the far-right members of Mr
Netanyahu’s coalition who are against a ceasefire. Whether or not
the prime minister actually intends to carry it out, he has directed
Israel’s negotiators in Doha, Qatar’s capital, to insist that Israel
continue to control the relevant corner during the 60-day truce. This
has added another obstacle to reaching a deal as Hamas insists the
IDF vacate the entire strip.

As negotiators haggle in Doha, the war in Gaza continues. In recent

days dozens of Gazans have been killed in daily Israeli air strikes or
while trying to get food from the controversial aid-distribution hubs
set up by Israel and operated by American mercenaries. At least 500
people are reported to have been shot dead near the centres since
they opened in late May. Fuel to operate the few remaining hospitals
and a desalination plant is running out due to the Israeli blockade.
Hamas now employs guerrilla tactics, carrying out ambushes against
Israeli forces. On July 7th it killed five soldiers using roadside bombs.

Israel’s generals have told their political masters that little of military
value remains in its operations. Many soldiers in the strip share that
view. “We’re just dithering here, blowing up buildings that have
already been destroyed and trying not to be ambushed,” says one.

Even so, Mr Netanyahu is continuing to hold out against Mr Trump’s

entreaties to announce an end to the war. He has yet to propose a
viable plan for a day-after scenario in Gaza. Yet there is still some
ground for optimism that this round of talks will end in a deal. The
president, flush from the ceasefire he imposed on Israel and Iran
after America’s strikes on Iran’s nuclear facilities, likes the idea of
himself as a world-historic peacemaker.

Mr Netanyahu, for his part, wants American backing for more strikes
if Iran tries to revive its nuclear and missile programmes, as Israeli
intelligence fears it is intent on. Mr Trump may not want to be
dragged into another round of fighting, though, so Mr Netanyahu

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may feel he needs to accept a deal in Gaza to keep Mr Trump on
side. At the same time, the threat from his far-right coalition
partners to leave the government, should he decide to end the war,
is becoming less compelling. Israel will have to hold an election by
October 2026 at the latest. For Mr Netanyahu, whose public image
has been somewhat boosted by the strikes against Iran, an earlier
one may not seem like a bad bet.

Hamas, too, is under increasing pressure to compromise·. With Iran

drastically weakened, it has lost one of its main backers in the
region. It still has the support of Qatar and Turkey, but both are
anxious to remain in Mr Trump’s good books. Within Gaza, Hamas is
enfeebled. A ceasefire now could be its best chance to retain some
of what little power it has left.

Yet even if a deal is reached in the coming days or weeks, the

reprieve is likely to be temporary. For the 60-day truce to lead to the
end of the war, unlike during the first ceasefire earlier this year, Mr
Trump will have to keep up pressure on both sides. And the would-
be peacemaker-in-chief is not known for his attention span. ■

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At its lowest ebb

Hamas looks close to defeat

If there is another ceasefire in Gaza, it may not be able to regroup
as before
7月 10, 2025 07:12 上午

Time to face the facts

THERE ARE few matters on which Binyamin Netanyahu, Israel’s

prime minister, agrees with Al Jazeera, the Qatari satellite TV
channel. Yet both consider Hamas, the Islamic movement that
controls the Gaza Strip, exceptionally resilient. After 21 months of
fighting there, Mr Netanyahu insists the group has yet to be
defeated. Meanwhile Al Jazeera still runs back-to-back bulletins
lauding Hamas’s heroics in the fight against Israel.

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Yet according to multiple testimonies from Gaza, Hamas is on its last
legs. Its military and political leadership has been almost entirely
eliminated. Its government no longer governs. Gangs and looters are
filling the vacuum. Its popular base has collapsed, with just 6% of
Gazans still said to support it. Foreign backers are retreating. Nearly
four decades after its founding, the group is nearing its lowest ebb.

Read all our coverage of the war in the Middle East

Little remains of the leadership, whose exile Israel demands as a

condition for a permanent ceasefire. All but one of its military council
have been killed. In May Ezz al-Din al-Haddad, the head of Hamas’s
Gaza City brigade, declared himself leader. He is said to survive by
using the 20 or so remaining Israeli hostages as human shields.
Israel has destroyed his communications network and chain of
command. Though isolated cells still regularly kill Israeli soldiers in
ambushes, Israel’s campaign to push Gazans into an ever-smaller
area is proceeding largely unopposed.

Hamas’s political leadership is in similarly dire straits. Of the 15-

strong politburo in Gaza, once the movement’s driving force, most
are dead. The three known survivors have fled abroad. Their
government in the strip is collapsing. The education and health
ministers are said to be alive, but incommunicado. The 36 hospitals,
12 universities and hundreds of schools they used to oversee mostly
lie in ruins. Israel’s army has killed law-and-order personnel, from
the interior and justice ministers down to traffic police. The clan-
based gangs that Hamas crushed back in 2007 have filled the
vacuum, looting much of what little food Israel has allowed
independent aid agencies to distribute in the strip in recent weeks.

After the ceasefire in January, Hamas quickly re-established control

in Gaza, despite the losses it had suffered. But it is now both weaker
and facing more competition. According to Mr Netanyahu, Israel has
armed the clans, at least six of which claim to have carved out their

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own enclaves and are engaged in near-daily skirmishes with what
remains of Hamas. Israel seems keen to give them more control.

At the peak of its power, in 2009, Hamas demanded a majority of

the seats on the Palestinian National Council, the Palestinians’
parliament. That was its price for reconciling with Fatah, the
Palestinian president’s movement in the West Bank, and for reuniting
the would-be state’s two separate territories. Now, if Israel let them,
President Mahmoud Abbas’s men could probably take over Gaza.

The world around Hamas has shifted, too. Gone are the monthly
stipends of $30m and $15m the group used to get from Qatar and
Iran respectively (in Qatar’s case via Israel). Israel’s pummelling of
Iran and its Lebanese satellite, Hizbullah, has also hit Hamas’s arms
supply and logistics support (though it is rumoured to be buying
some weapons from the clans Israel is arming). The movement still
has supporters in the diaspora, but they are embattled, too. Britain
recently classified a pro-Palestinian civil-disobedience group as a
terrorist outfit. If Palestinians in the diaspora had a vote, Hamas
might still win an election. But they don’t.

For now, Hamas’s decision-makers limp on in Doha, Qatar’s capital,

and Istanbul, the two cities where they can still operate. Without
proper control of Gaza, the movement can no longer pack a punch.
Its prime remaining leverage is control over the surviving Israeli
hostages, which they may soon have to give up as part of a second
ceasefire. If anyone cared to ask them, the desperate people of
Gaza would probably say that whatever remains of the group should
just surrender and go. ■

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Trumpafrique

Donald Trump’s approach to

Africa is very, well, African
What a meeting with five leaders says about his administration’s
interest in the continent
7月 10, 2025 07:13 上午

IT IS EASY to make a case that Donald Trump cares little about

Africa. On July 1st he closed the United States Agency for
International Development (USAID), absorbing an institution that
spent 40% of its budget on sub-Saharan Africa into the State
Department. The administration has yet to fill several Africa-related
posts. AFRICOM, America’s military hub on the continent, speaks
euphemistically of a new “African-partner-led” approach to security.
The African Growth and Opportunity Act (AGOA), which granted

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duty-free access to the American market for African exporters,
expires on September 30th. Of the 19 countries subject to Mr
Trump’s latest travel ban, ten are African.

Yet Mr Trump is showing surprising enthusiasm for meeting his

African counterparts. On July 9th he hosted presidents from five
African countries in the first of what is mooted as a series of
meetings. In May he met Cyril Ramaphosa, South Africa’s president.
The leaders of Congo and Rwanda, which signed an American-
brokered peace deal in June, may also soon visit. A bigger summit
involving dozens of African leaders is planned for September.

The upshot is a paradox. Under Mr Trump, America will do a lot less

in Africa than it has done for decades. But African leaders will get
more chances to have the ear of the American president.

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Mr Trump, who has called Namibia (or maybe Zambia) “Nambia” and
said of Congo “I don’t know what that is”, may end up hosting more
African leaders than any of his predecessors. Data from Judd
Devermont, a former Africa official in the White House, show that
George W. Bush holds the record (see chart). If judged on his first
term, Mr Trump would be bottom of the list. In his second he may
move up.

The meeting on July 9th is a sign of his personalised and often

random approach. Beyond being from coastal states in or close to
west Africa (Gabon, Guinea-Bissau, Liberia, Mauritania and Senegal),
the guests have little in common. There is no regional hegemon
among them. Some have mining prospects, but they lack the mineral
resources of, say, Congo.

Instead, the meeting is the result of lobbying by Umaro Sissoco

Embaló, president of Guinea-Bissau. The former Portuguese colony
of 2m people is best known as a coup-prone narco-state. Yet Mr
Sissoco Embaló fancies himself as Mr Trump’s Africa whisperer. He
has made around 300 foreign visits since taking power in 2020;
many of them, according to one African leader, without being
invited. An opposition figure from Bissau says his message for
Washington is: “I’m your man, tell me what you want me to do to
help you.”

For Mr Sissoco Embaló the meeting is a way of trying to win support

for his efforts to stay in power. Mr Trump, who is as transactional as
your typical African leader, felt it was worth an hour of his time to
have lunch. The other guests were added later, seemingly on the
basis that they were from the same rough neighbourhood without
being of first-tier importance.

The Trump administration is clear that its priority in Africa is

business. “We no longer see Africa as a continent in need of
handouts, but as a capable commercial partner,” says Troy Fitrell, the
outgoing senior official for Africa in the State Department. The goal

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is “to increase US exports and investment in Africa, eliminate our
trade deficits and drive mutual prosperity.” If more business for
America means less business for China, all the better.

To that end American ambassadors will have more of their

performance assessed on whether they can seal deals for American
firms. Government agencies that offer financial incentives to
American firms to invest in Africa (and other places) have been told
to disburse money more quickly.

At the lunch on July 9th, Mr Trump told his guests he sees “great
economic potential in Africa” as they took turns flattering him.
Bassirou Diomaye Faye, Senegal’s president, complimented Mr
Trump’s golf skills and offered to build a golf course.

The culture of the Trump administration is familiar to many African

leaders, argues Alex Vines of Chatham House, another think-tank.
“Neo-patrimonialism”, a term used to describe how in post-colonial
Africa formal state institutions exist alongside informal networks
involving business associates and members of the same family or
tribe, is a useful way of thinking about Trump world, says Nic
Cheeseman of the University of Birmingham in Britain. Massad
Boulos, father-in-law to Mr Trump’s youngest daughter and a
member of a Lebanese family with business interests in Africa, is the
president’s senior Africa adviser. Gentry Beach, a university friend of
Donald Trump junior, is said to be exploring a deal to invest in a
mine in eastern Congo.

Yet it is far from clear that Africa benefits when American policy is all
realism and no altruism. “Each deal is an appeasement mechanism,”
argues Gyude Moore, a former Liberian cabinet minister. “Something
to stave off further deterioration of an already negative situation.”
Except for some resource-rich countries, most will not be able to
offset the impact of aid cuts and higher tariffs.

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Mr Devermont notes that “on balance” presidents with the most Oval
Office meetings with African leaders left the largest impact on the
continent. Mr Bush created PEPFAR, an anti-AIDS initiative. Kennedy
set up USAID. Mr Trump’s legacy, if he leaves one, will be defined by
deals, not do-goodery. ■

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Assassin’s creed

Got an enemy? Hire a killer

In South Africa, contract murders are spreading from gangland into
wider society
7月 10, 2025 07:13 上午 | Cape Town

IN LATE JUNE a dozen soldiers from a South African elite special-

forces unit appeared in court in Johannesburg. They were charged
with the murder of Frans Mathipa, a police detective. He was shot
twice in the head from a moving car while driving north from
Pretoria in 2023.

The detective’s murder is a special case: at the time he was shot, he

was investigating the unit whose members have been charged with
his killing. Yet it is also part of a grim trend. Having inconvenient
people bumped off is disturbingly common in South Africa. What

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began as a way to settle drug disputes or turf wars between gangs
has become a service industry with a varied customer base. Targets
range from teachers to civil servants and politicians.

Contract killings are still a small share of all murders in the country
of 64m people, where an average of 72 people were killed every day
in 2024. Yet there has been a sharp rise since 2015, says Rumbi
Matamba, who tracks these murders for the Global Initiative Against
Transnational Organised Crime (GI-TOC), an NGO. There are now at
least ten a month, reckons Ms Matamba, up from around four a
month in the early 2010s. She says the rise is mostly the result of
the increasing availability of both guns and hitmen, known as
izinkabi in Zulu. Legitimate jobs are scarce and killers are rarely
caught. As a result, many young men who started out as apprentice
assassins in gangs are now willing to moonlight for other clients.

The first time he killed someone for money it took him two days to
work up the courage, says one teenage killer. He shot three times,
missing once, “because it was the first time, and I looked away”. The
next four murders came easier. “After two or three times you can
look at someone’s face,” he says. He reckons he may survive in the
job for a year or two. The most he has ever been paid for a hit was
400 rand ($23). That is at the low end of the scale. Murders that
require extensive surveillance of the intended victim, or where the
victim has bodyguards, cost more.

The proliferation of hitmen is one factor in the spread of

assassinations. Another is impunity. One study estimates that police
solve as few as one in ten political assassinations. Partly that is
because the criminal networks are so sophisticated. Triggermen
rarely know who commissioned the hit, says Mark Shaw, author of a
book on assassinations. Both middlemen and izinkabi are expendable
if powerful clients want to cover their tracks. Yet police are also
sometimes complicit, either by renting out their uniforms or body
armour to criminals, or by offering themselves as killers for hire. Of
the 337 people arrested by an assassination task force since 2016,

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47 were members of the police. The task force was disbanded earlier
this year; on July 6th a senior policeman broke ranks and accused
the minister of police of meddling in its investigations (the minister
denies the allegation).

Most contract killings are still linked to disputes over lucrative

minibus routes, which are controlled by mafia-like networks, and
other organised crime. Together these account for around two-thirds
of the total, according to GI-TOC. About a quarter are politically
motivated, often linked to rivalries within the African National
Congress, the main governing party, as candidates seek to eliminate
rivals higher up on election lists or gain control of lucrative municipal
budgets.

The practice is beginning to seep into other areas of society. In 2021

the chief accountant in Johannesburg’s provincial health department
was murdered as she was preparing to expose a big accounting
fraud in a local hospital; her death set the investigation back by
years. In 2017, the head teacher of a school in KwaZulu-Natal
province was shot in front of her history class; school governors
barred staff from applying to fill the vacancy because they suspected
them of having been involved.

When politicians and civil servants fear for their lives for doing their
jobs, the functioning of the state is compromised. That is even more
true when lawyers, politicians or members of the police like Mathipa
are targeted. Mr Shaw worries that hitmen could increasingly be paid
to kill more senior politicians, police officers or judges, further
undermining South Africa’s already embattled institutions.

The arrests in the Mathipa case are a welcome sign that the South
African state is not entirely powerless to deal with the threat. Yet
real justice is rare. The men who killed the accountant in
Johannesburg were eventually convicted. Their paymasters remain
in the shadows. ■

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Unlikely partners

Congo’s football diplomacy

What is the point of the country’s sponsorship deal with AC Milan?
7月 10, 2025 07:13 上午

THE WEBSITE of AC Milan, an Italian football club, lists the club’s

sponsors. Recently, a new name appeared between Clivet, a maker
of air-conditioners, and Kumho, a tyre manufacturer: the Democratic
Republic of the Congo.

The deal, which is driven by Congo’s tourism ministry, may seem

unusual. Congo’s annual GDP per person is less than $650. Many
governments advise their citizens against travelling to the country,
large swathes of which are riven by war and lawlessness. Why would
it decide to sponsor a wealthy European football team?

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The answer is diplomacy. Congo has been in conflict with
neighbouring Rwanda for more than 30 years (a peace deal, signed
in June, left out important details). Rwanda has been in the football
business since 2018, when it made a sponsorship deal with Arsenal,
a British team, said to be worth $10m a year. It later struck similar
agreements with Paris Saint-Germain in France and Bayern Munich in
Germany.

As fighting on the border escalated earlier this year Thérèse

Kayikwamba Wagner, Congo’s foreign minister, pressed the clubs to
end their deals with Rwanda, to no avail. So now Congo is instead
trying to emulate its neighbour.

The deal is unlikely to attract many tourists. But it may bring other
benefits. AC Milan has close links with Italy’s political establishment.
The deal aligns with Italy’s new Africa policy, for which it earmarked
€5.5bn ($6bn) last year, with Congo billed as a chief beneficiary.
Announced just before Congo and Rwanda made peace in
Washington, it may also please Donald Trump: an American firm
bought a majority stake in AC Milan in 2022.

The benefits for AC Milan are less clear. The club did not disclose the
value of the deal. It will probably see no money flow its way, reckons
Simon Chadwick of Emlyon Business School in France. Even if it did,
the amount would probably be negligible. Congo’s $18m tourism
budget is dwarfed by AC Milan’s €457m in annual revenue.

Instead, aligning with a government with a less-than-stellar human-

rights record may invite opprobrium, as Arsenal found when it
partnered with Rwanda. Yet plans to refurbish sports facilities and
set up a youth academy in Congo suggest the club is happy to
accept that risk to bolster its reputation for social work—and its
relationship with millions of African fans. ■

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Europe
Viktor Orban’s economic luck runs out
Pride before a fall :: Apart from Poland, central Europe’s Visegrad Four face a
slowdown

Ukraine’s political infighting gets nasty

Unfinished business :: As Trump starves it of arms, there is turmoil inside the
government

Austria’s leader is striving to fend off the

hard right
The accidental chancellor :: Christian Stocker hopes competence will restore the
centre-right’s popularity

More European countries want to send their

prisoners to other countries
Send the bad guys away :: The idea of renting prisons may be catching on

Iceland has no armed forces, but that could

change
Army of me :: The NATO member is reconsidering its defences in the age of Trump

Denmark’s left defied the consensus on

migration. Has it worked?
Charlemagne :: Building walls, one brick at a time

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Pride before a fall

Viktor Orban’s economic luck

runs out
Apart from Poland, central Europe’s Visegrad Four face a slowdown
7月 10, 2025 07:12 上午 | BUDAPEST

FOR VIKTOR ORBAN, it was a nightmare. On June 28th over

100,000 people marched in Budapest’s Pride parade, championing
LGBT rights and defying a government ban. Hungary’s hard-right
prime minister has dominated his country’s politics since 2010. But
for months polls have put his Fidesz party well behind a new outfit
founded by Peter Magyar, a conservative who rails against
government corruption. With a general election due in April, Mr
Orban’s formula of bashing gays, migrants and the European Union
seems to have stopped working.

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Yet corruption is far from the only reason voters have turned on the
government. “The Hungarian economy is going nowhere,” says Peter
Virovacz, an economist at ING, a bank. After a good run in the past
decade, the country has run out of steam.

Central Europe’s “Visegrad” states, or V4 (the Czech Republic,

Hungary, Poland and Slovakia), have had strong economies for
years. Now, apart from Poland, they are going through a rough
patch. All four have revised expectations down in the face of Donald
Trump’s trade war. Poland is still expecting growth of 3.3% this year,
according to the spring forecast of the European Commission. But
Hungary is expected to grow by just 0.8%, Slovakia 1.5% and the
Czech Republic 1.9%.

In the past five years the V4 have faced repeated tests. Both the
pandemic and Russia’s full-scale invasion of Ukraine, which hugely
inflated energy prices, depressed the growth they need to catch up
with western Europe. The latest headaches are rising tariffs, which
feel especially threatening to open economies such as the V4, and
the woes of German industry. Germany trades more with the V4
collectively than with America or China, and is the biggest investor in
the region.

“The broad story is still one of resilience,” says Richard Grieveson of

the Vienna Institute for International Economic Studies.
Consumption and investment are strong and labour markets are
tight. Direct trade flows between the V4 and America are low, so the
immediate impact of Trumpian tariffs is relatively modest. Slovak
exports to America account for 4% of GDP; for the other three the
figure is 1%-3%. Poland has the least to worry about, with a big
internal market of 39m people, larger than the other three
combined. Exports of goods and services in 2023 came to 58% of
Poland’s GDP; for Slovakia it was 91%.

What will hurt more is the tariffs’ collateral damage, which stems
from the V4’s close ties with Germany’s export-dependent industries.

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These were struggling even before Mr Trump started his trade war.
Germany’s economy contracted slightly in both 2023 and 2024. The
car industry, Germany’s biggest, faces declining demand and rising
Chinese competition. Mr Trump’s 25% tariffs on European car
imports have added to its woes.

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That hits the Czech Republic, Hungary and Slovakia hard. Mercedes,
Volkswagen (VW) and BMW are big investors in all three countries.
Audi (part of VW) employs more than 11,000 workers at a factory in
Gyor, in western Hungary. In Kecskemet, south of Budapest, a
Mercedes plant has over 5,000 employees. The automotive industry
is “the crown jewel” of central Europe’s industrial heartland, as a
recent paper by the European Council on Foreign Relations (ECFR)
puts it. It generates 9% of GDP in both the Czech Republic and
Slovakia.

The ECFR paper warns that Europe’s industrial might could wither if
carmakers close their factories because of competition with Chinese
brands. Another possible scenario is a “sinicised heartland”, with
Chinese firms acquiring or creating car companies in central Europe.
This process has already begun. In May BYD, a Chinese electric-
vehicle (EV) maker, announced that it will establish its European
headquarters in Hungary, where it is building an enormous factory.
China’s CATL is building a huge battery plant for EVs in the
Hungarian city of Debrecen. Volkswagen is reportedly considering
Chinese offers to buy some of its excess capacity.

Poland’s economy is more diversified, and the car industry plays a

lesser role. But Germany is still its largest trading partner, accounting
for a quarter of trade, and its biggest European investor. It provides
16% of foreign direct investment.

There is a silver lining to the V4’s tight intermeshing with German

industrial supply chains. The region is expected to benefit from the
massive investment programmes in defence and infrastructure
launched by Friedrich Merz, the new German chancellor. Mr
Grieveson thinks Germany’s fiscal stimulus will have a spillover effect
in the V4 starting next year.

Some hope peace in Ukraine will provide a boost, if it comes.

Reconstruction “will be a growth driver”, predicts Adrian Stadnicki of
the German Eastern Business Association. A study by the United

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Nations, the EU and the World Bank estimates the cost of rebuilding
at half a trillion dollars. But whether such sums can be ponied up at
a time of tight budgets and waning global interest seems doubtful.

Zoltan Torok, an economist at Austria’s Raiffeisen Bank in Budapest,

agrees that peace will be a boon for the region. But he does not
think it will enable the V4, with the possible exception of Poland, to
escape the middle-income trap; they may remain stuck at an
intermediate level of economic development. They badly lack
innovative companies. As they spend only 1-2% of GDP on research
and development, this is unlikely to change soon. No wonder that
according to Mr Torok, “the mood of Hungarian business is
depressed.” There seems to be more excitement on Budapest’s
streets than in its boardrooms. ■

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Unfinished business

Ukraine’s political infighting

gets nasty
As Trump starves it of arms, there is turmoil inside the government
7月 10, 2025 07:12 上午 | KYIV

THE CHALLENGES are flying in. With no ceasefire in sight, Ukraine is

hunkering down for protracted war. The news from the front lines is
not good. Russian forces are on the verge of turning Sumy, a city
with a pre-war population of 250,000, into a grey zone. A bloodbath
continues in the Donbas as Russia presses forward. Record numbers
of Russian drones and missiles rain down on Ukraine’s big cities,
sometimes more than 500 in a single night.

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On the night of June 30th-July 1st, American military assistance,
tapering off since Donald Trump became president, stopped
abruptly, with all arms shipments put on hold and some planes even
turned around in mid air. No one knows whether this pause is
temporary (as last time, in March) or permanent. Some sources
insist Mr Trump was himself unaware of the halt; others that it is all
part of a plan to put pressure on Ukraine to make concessions to
Russia in order to achieve a peace deal, no matter how bad, for the
president. But Ukraine’s military drama is only one side of the story.
Equally worrying is a backdrop of domestic political fracture, purges
and infighting that could unravel the country from within in a fashion
far more damaging than anything the Russians can achieve through
violence.

Three developments in June set the tone. On June 23rd, a deputy

prime minister, Oleksiy Chernyshov—once tipped as a future prime
minister—became the most senior Ukrainian politician ever charged
with corruption. On government business in Europe, he initially
delayed returning, creating the absurd image of a minister for
repatriating Ukrainians planning his own self-exile. At around the
same time, the cabinet was warned of an imminent reshuffle, and
the probable appointment of a new prime minister, the 39-year-old
Yulia Svyrydenko. And a renewed attempt was made to remove
Ukraine’s fiercely independent spy chief, Kyrylo Budanov—though it
ended in failure, at least for now. Multiple sources identify the
shadowy hand of Andriy Yermak, who runs the presidential office but
in reality is an unelected chief minister in all but name, as
instrumental in all three plays.

Mr Yermak’s outsize role in government attracts rumour and

conjecture. Standing 1.85m tall, his imposing physicality has become
more pronounced over the war, as if feeding off the shrinking frames
of rivals. Before appearing as a junior aide to Volodymyr Zelensky,
Ukraine’s president, in 2019, he was known as a TV and film
producer; a lawyer; an operative in the fashion industry; and a fixer
for kiosk businesses. His political rise has been meteoric and

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unexpected, but many are unimpressed. Recent articles in Politico
described bipartisan American despair at Mr Yermak’s lecturing
approach to diplomacy. Some see the prickly aide as simply a
lightning rod for wider American fatigue with Ukraine, but the
reports reflect a real sense that doors are closing on him in
Washington. It has had many believing Mr Yermak would be fighting
for his political life. The three plays in June suggested the contrary:
domestically, he is stronger than ever.

There is no evidence Mr Yermak ordered the probe into Mr

Chernyshov. For over a year, detectives have been investigating
claims that the deputy prime minister’s associates bought cut-price
apartments in a project he green-lit. But three officials, speaking
anonymously, say that Mr Yermak wielded his influence by
deliberately letting the case progress, while freezing others. Mr
Chernyshov’s real offence, they claim, was that he got in Mr
Yermak’s way. First, he tried to offer himself as an alternative
conduit for American relations. Second, his downfall cleared the field
for the promotion of Ms Svyrydenko, a politician closely associated
with Mr Yermak. (Ukraine’s National Anti-Corruption Bureau denies
that politicians have any influence over its investigations.)

The idea of Mr Yermak’s protégé replacing the incumbent prime

minister, Denys Shmyhal—an unfussy, compliant administrator—is
not new. A year ago, Mr Zelensky vetoed the switch. But since then,
Mr Yermak has grown stronger; his rivals weaker. A parliamentary
vote on the change is now expected in the next couple of weeks.
Apart from the new prime minister, changes are expected at
education, health, culture, social policy and possibly finance. One
senior official says that “Andriy is completing what he sees as
unfinished business. The [vast majority] of the people are his.”

Throughout June, an even more dramatic purge loomed in Ukraine’s

intelligence service, with a three-year feud between Mr Yermak and
General Budanov threatening to climax with the latter’s dethroning.
Sources close to the aide brand the general an erratic revolutionary,

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building his own political machine. “Ninety percent of the
[presidential] office think he’s mad,” says one insider, “and ten
percent think he’s a genius.” The spy chief’s allies on the contrary
call him a committed statist, and one of a dwindling few able to tell
the president hard truths. But by mid-June, many of them feared Mr
Yermak’s “ninth try” at ousting him would succeed. That turned out
to be premature. With his customary mix of coercion and guile,
General Budanov secured another stay of execution. The Economist
understands repeated White House warnings not to fire him may
have helped, at least for now.

General Budanov’s survival shows that President Zelensky retains the

final decision, whatever Mr Yermak’s role may be in his system. Mr
Yermak seems not to wield power on his own, but derive it from a
strange co-dependency with the president, something no source can
quite put their finger on. Sometimes, the stubborn aide is simply a
proxy for a stubborn Mr Zelensky. But officials insist the extent to
which Mr Yermak is controlling information flows to the president is
real enough—85% in one estimation—and is creating a dangerous
atmosphere of innuendo and conspiracy at the heart of the
government machine. “Andriy has monopolised the president’s ear,”
says one. “Six years in one room, feeding him with leading opinions.
It’s already one person in effect.”

Rough palace politics are no new phenomenon, nor unexpected in a

country tested by three and a half years of war. It would be
surprising if Ukraine’s exhausted leadership did not centralise
decision-making. But the enormity of the country’s predicament—
with its strategic situation deteriorating with every day—makes
concentrated and dysfunctional power structures dangerous. There
is also concern about the inappropriate use of executive power to
impose sanctions orders preventing enemies and rivals from
participating in public life. One solution would be to open up, but
that is not something that is expected. “The Russians are slow-
roasting us over a low flame,” despairs one senior official, “while we
are playing at idiotism with very serious consequences.” ■

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The accidental chancellor

Austria’s leader is striving to

fend off the hard right
Christian Stocker hopes competence will restore the centre-right’s
popularity
7月 10, 2025 07:13 上午 | VIENNA

Contemplating political nirvana

ON JANUARY 5TH Christian Stocker drove to a leadership meeting of

the People’s Party (ÖVP) wearing jeans, expecting to resign from his
job as party secretary-general. Coalition talks with the Social
Democrats (SPÖ) and the liberal NEOS had failed; Karl Nehammer,
the ÖVP leader and chancellor, had stepped down. Instead, a few
hours later Mr Stocker emerged in a blue suit (quickly driven over
from his home) to announce that as the acting party leader he

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would conduct talks with the hard-right Freedom Party (FPÖ) to form
a government led by Herbert Kickl, the FPÖ’s head.

The FPÖ, one of the earliest of Europe’s parties to embrace anti-

immigrant populism, had come first in an election in September. But
its coalition talks with the ÖVP under Mr Stocker quickly collapsed
too, over disagreements on Europe policy (and whether German
should be the sole official language at universities). Austria’s
president then asked Mr Stocker to try again with the SPÖ and
NEOS. Haunted by the thought of seeing Mr Kickl in Ballhausplatz,
the chancellor’s baroque offices, the parties put together the first
three-way coalition in Austria’s history. After four months in power,
on July 7th Mr Stocker held a press conference with the SPÖ‘s
Andreas Babler, his deputy, and the NEOS’ Beate Meinl-Reisinger, his
foreign minister, to take stock.

Mr Stocker is not given to hyperbole; his nickname is the Buddha of

Ballhausplatz. He terms his team’s work so far “presentable”. He has
curbed refugees’ rights to family reunification, and tightened gun
laws following a mass shooting at a school in Graz last month, which
killed ten people. The budget he has proposed for this year and next
includes spending cuts of €15bn ($17.5bn). The deficit in 2024 came
to 4.7% of GDP; this year’s is forecast at 4.5% even with the cuts,
well over the EU‘s much-abused 3% limit. On July 8th the European
Commission subjected Austria to its excessive-deficit procedure,
applying pressure to narrow the gap further.

Interviewed by The Economist, Mr Stocker says competent, stable

government will restore his party’s popularity. Immigration has been
slashed, he says, comparing the current situation to that in 2019,
when Mr Kickl was interior minister in a previous government. Some
14,000 asylum-seekers now receive welfare payments, about 12,000
fewer than in spring 2019. Mr Kickl has shown “he can’t do it”, says
the chancellor.

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Mr Stocker says his biggest challenge is to persuade disillusioned
voters who backed the FPÖ last autumn that the hard-right party
does not have answers to their problems. During the election
campaign he called Mr Kickl a threat to democracy and a security
risk, and he says he meant every word. At the election the FPÖ got
29% of the vote, the ÖVP 26% and the SPÖ 21%. Recent polls show
little has changed. Mr Stocker admits this is not good enough. But
with federal elections not due till 2029 and state ones in 2027, he
has some time to implement reforms.

Kathrin Stainer-Hämmerle of the Technical College in Kärnten thinks

that Mr Stocker and his team are governing competently, but lack
vision. At a time of war in Ukraine and turmoil in America, Austrians
need a “grand narrative” of where the country is going. The inflation
rate stood at 3.3% in June; groceries, especially sensitive for
working-class voters, are substantially more expensive than in
neighbouring Germany. The trade wars unleashed by Donald Trump
weigh heavily on a country where exports account for 60% of GDP.
America is the country’s second-biggest trading partner after
Germany.

The country’s mood is middling, says Laurenz Ennser-Jedenastik of

the University of Vienna. Planned cuts to pensions and early-
retirement rights could depress it. So might the upcoming end of the
climate bonus, a rebate of carbon taxes. Mr Stocker knows his
government is probably the last chance to prevent one led by the
caustic Mr Kickl, a xenophobe who terms political rivals “traitors to
the people”. It is a tall order. Mr Stocker is approaching it with
Buddhist calm. ■

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Send the bad guys away

More European countries

want to send their prisoners
to other countries
The idea of renting prisons may be catching on
7月 10, 2025 07:13 上午

EUROPE’S JUSTICE ministries have a problem. Courts are locking up

more criminals, but figuring out where to put them is proving tricky.
In a growing number of countries, prisons are packed to the rafters.
Occupancy levels now average close to 95% in the European Union;
they exceed 100% in nearly half the bloc, mainly in western Europe.
Beyond the EU, the trend is similar. Even in Switzerland and Iceland,
which boast some of the lowest crime rates in the world, jails look

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uncomfortably full, thanks to lengthier sentences. Britain’s are
bursting. Building new prisons is expensive, slow and provokes
resistance from the NIMBY crowd.

Some governments are turning to unconventional solutions. On May

18th France’s justice minister, Gérald Darmanin, announced plans for
a new prison in Guiana, a French overseas territory in South
America, including a high-security wing for particularly dangerous
criminals. To avoid drawing parallels with the days when France ran
the notorious Devil’s Island penal colony there, Mr Darmanin
emphasised that most spaces will be filled by local offenders and
drug traffickers.

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For countries lacking overseas territories with cheap land and flexible
construction rules, the challenge is tougher. One solution lies in
European countries that do not face prison overcrowding. Some
countries with spare capacity seem open to renting out their vacant
cells. For €200m ($234m) over ten years, Kosovo has agreed to
house 300 inmates from Denmark in its Gjilan prison. That will cut
Danish occupancy levels from near-full to a more manageable 92%.
Kosovo is also talking to other countries, including Belgium. Estonia,
where nearly half of prison cells sit empty, is putting out feelers to

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potential renters. Sweden is said to be interested: its crackdown on
gang violence is landing ever more people in the slammer.

Backers of prison-rental arrangements argue that they simply

allocate resources more efficiently, creating a sort of market for
prisoners. But other issues are in play. Both United Nations
guidelines (known as the Nelson Mandela rules) and the Council of
Europe’s rules give prisoners the right to in-person contact with
family. The distances involved in some rental arrangements make
this prohibitive. Families of Danish prisoners would face a journey of
over 2,100km to visit inmates at Gjilan. Danish authorities want to
arrange virtual visits and provide funding for travel, but inmates will
find sentences lonely.

Governments are trying to get round these concerns by reserving

the schemes for foreign nationals, who represent a hefty share of
the prison population in much of western Europe. This also allows
governments to spin the proposals as a way of getting tough on
illegal immigration. It is no coincidence that most of the countries
considering prisoner transfers are ones where far-right parties are
particularly influential, or (in Denmark’s case) where the government
has adopted a hardline stance on immigration. The idea is that once
prisoners have served their sentence overseas, they will be deported
directly to their country of origin, rather than going back to the
country in which they were convicted.

Others fret about conditions in foreign prisons. Countries with cells

for rent have little experience with foreigners in custody. Language
barriers pose obvious challenges. If the schemes materialise,
governments may need to hire or retrain a lot of new prison staff.
Denmark is providing training to Kosovar prison guards and
rebuilding the Gjilan facility so that it complies with Danish
standards. But prisoners are unlikely to be enthusiastic about being
forcibly carted off to faraway facilities, while prison guards may
resent treating foreign inmates better than local ones. The
atmosphere in such prisons could become extremely tense.

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Longer prison terms are one reason for the overcrowding. Moving
prisoners to rented jails abroad is a dodge, says Catherine Heard of
the Institute for Crime and Justice Policy Research in London:
“Rather than accepting that decades of tougher sentencing policies
are what caused the crisis, not foreign criminals, it is politically
easier to reach for a headline-grabber, like deportation to Kosovo.”
But in some countries crime is rising; others, such as the
Netherlands, have too few corrections officers. Fixing such problems
is difficult. Far easier to ship inmates away. ■

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Army of me

Iceland has no armed forces,

but that could change
The NATO member is reconsidering its defences in the age of Trump
7月 10, 2025 07:12 上午 | Reykjavik

State of emergency?

ZIPPING OVER lava fields and fjords, the Icelandic coastguard were
putting a chopper crew through its paces. The coastguard, which
Iceland relies on instead of an army, does everything from rescuing
wayward tourists to protecting undersea cables from sabotage. But
they are starting to feel a bit overstretched. “Three helicopters, two
ships and one aeroplane is not enough,” sulks one officer after
dropping off a colleague next to a steaming volcano.

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A founding NATO member, Iceland has relied mainly on America for
its defence. But as Europe rearms and the Americans call out
laggards, it is feeling the heat. “They are putting pressure on us,”
admits Thorgedur Katrin Gunnarsdottir, the foreign minister. Iceland
has spent just 0.2% of its GDP on defence in recent years.

Home to some 400,000 people, the island matters. Americans use it

as a base to watch for Russian submarines sneaking into the

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Atlantic. This geographical importance has allowed Iceland to
outsource its own defences. “We need to do more,” says Thorgedur.
There are plans to boost spending, perhaps to 1.5% of GDP. That
will help keep watch over the Atlantic and build infrastructure that
American and European ships, submarines and planes could use as
wartime staging posts.

But neglect leaves Iceland vulnerable elsewhere. It could be cut off

if its cables were severed. It has no intelligence service to hunt
saboteurs and spies. Thorgedur says she supports setting one up.
The coastguard would struggle if multiple ships sank simultaneously;
Iceland has only recently begun spending on unmanned submarines
and anti-drone technology. A cross-party task force is discussing
what else to consider.

Some want to take the next step. Arnor Sigurjonsson, until recently
the Icelanders’ top defence official, says the government in
Reykjavik should bite the bullet and create an army. It is infantilising
to outsource defence, he argues. He wants a thousand-strong force
to defend airports and harbours in emergencies and says Icelandic
infrastructure could be targeted by Russian strikes. “They say that
we are too few and too poor,” he says. “This is simply not true.”

Such views were once laughed at, but no longer. Though most
remain sceptical about Arnor’s proposal, Icelanders generally agree
they should spend more. Thorgedur takes no position on the need
for an army, but notes that Luxembourg has a small force. Malta too
has a proper fleet. “I am not afraid of this debate,” she says. “The
main question is: how do we defend Iceland?”

The issue has become more pressing because of Donald Trump’s

threats against (relatively) nearby Greenland, which Icelanders have
followed with alarm. It is Mr Trump who would decide whether
America will defend Iceland. He must surely be displeased that
Americans have been footing the island’s defence bill.

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It is a geological fact that Iceland is being torn apart as Europe and
America drift away from each other. Volcanoes testify to this. Now
Icelanders worry it could become a political reality too. That is
rekindling debate over whether to join the European Union. A
referendum is planned on resuming accession negotiations. Polls
indicate it will pass. Icelanders, says Pawel Bartoszek, a pro-
European MP, are looking towards Europe more than ever. The two
people doing most to convince them to join the EU, he says, are
“Vladimir Putin and, in many ways, Donald Trump”. ■

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Charlemagne

Denmark’s left defied the

consensus on migration. Has
it worked?
Building walls, one brick at a time
7月 10, 2025 07:12 上午

VENTURING BEYOND the ring road of just about any western

European capital, far from its museums and ministries, often means
encountering a landscape that mainstream politicians prefer to gloss
over. Many suburbs are havens of familial peace. But others are the
opposite: run-down dumping grounds into which societies shunt the
immigrants whom they have failed to integrate. In the unloveliest
banlieues surrounding Paris, Berlin or Brussels, criminality—whether

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petty, organised or drug-related—is often rife. Social indicators on
education or employment are among the nation’s worst. Ambitious
youngsters looking to “get out” know better than to put their real
home address on their CVs.

These are uncomfortable facts, so much so that to point them out is

to invite the disgust of European polite society. Whether in France,
Germany, Italy or Sweden, parties of the hard right have surged as
they—and often only they, alas—persuaded voters that they grasped
the costs of mass migration. But the National Rally of Marine Le Pen
in France and Giorgia Meloni’s post-fascist Brothers of Italy have an
unexpected ally: Denmark’s Social Democrats, led by the prime
minister, Mette Frederiksen. The very same party that helped shape
the Scandinavian kingdom’s cradle-to-grave welfare system has for
the past decade copy-pasted the ideas of populists at the other end
of the political spectrum. Denmark is a generally well-run place, its
social and economic policies often held up for other Europeans to
emulate. Will harsh migration rhetoric be the next “Danish model” to
go continental?

Ms Frederiksen, who served as party leader for four years before

becoming prime minister in 2019, did not pioneer the migrant-
bashing turn. Like most western European countries, Denmark had
welcomed foreign workers and some refugees from the 1960s on.
The tone shifted as early as the early noughties, even more so after
an influx of Syrian asylum-seekers reached Europe in 2015. While
Germany showed its kind side—the then chancellor, Angela Merkel,
asserted with more hope than evidence that “we can manage this”—
Denmark fretted that a far smaller number of arrivals might
undermine its prized social arrangements.

The Danish left’s case for toughness is that migration’s costs fall
overwhelmingly on the poor. Yes, having Turks, Poles or Syrians
settle outside Copenhagen is great for the well-off, who need
nannies and plumbers, and for businesses seeking cheap labour. But
what about lower-class Danes in distant suburbs whose children

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must study alongside new arrivals who don’t speak the language, or
whose cultures’ religious and gender norms seem backward in
Denmark? Adding too many newcomers, the argument goes—
especially those with “different values”, code for Muslims—challenges
the cohesion that underpins the welfare state.

For a place with a cuddly reputation, Denmark has been cruel to its
migrants. Authorities in 2015 threatened to seize asylum-seekers’
assets, including family jewels, to help pay for their support. Benefits
were cut, as was the prospect of recent arrivals bringing in family
members. Being granted permanent residency, let alone Danish
nationality, takes longer than almost anywhere else. And it is far
from guaranteed: those offered refuge are afforded protection only
as long as conflict in their home country rages, their status reviewed
every year in some cases. Somalis and Syrians once settled in
Denmark are among those who have been asked to head back to a
“home” their children have never known.

In 2021 it was proposed that newcomers seeking asylum in Denmark

should be processed in Rwanda instead, a plan that fizzled. A law
passed by Ms Frederiksen’s predecessor, but which she
enthusiastically carried forward, cracks down on “ghettos”, now
known as “parallel societies”: estates housing lots of folks with “non-
Western backgrounds”. If crime, unemployment or other metrics are
too high, failure to reduce them (or the “non-Western” resident
share) can result in their being razed or sold off.

The upshot of the left’s hardline turn on migration has been to

neutralise the hard right. Once all but extinct, it is still only fifth in
the polls these days, far from its scores in the rest of Europe. For
good reason, some might argue: why should voters plump for
xenophobes when centrists will deliver much the same policies
without the stigma? Either way, that has allowed Ms Frederiksen to
deliver lots of progressive policies, such as earlier retirement for
blue-collar workers, as well as unflinching support for Ukraine. The
47-year-old is one of few social-democratic leaders left in office in

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Europe, and is expected to continue past elections next year. Before
that, she has a megaphone to pitch her unyielding approach to
migration to the rest of the EU: Denmark holds the bloc’s rotating
presidency until the end of the year.

To tolerate or not to tolerate

Denmark’s near-consensual diagnosis that the poor are left to pick

up the pieces of botched migration policies is worth pondering. But
this recent visitor to Copenhagen left with an uneasy feeling.
Immigrants and their descendants make up about 1m of Denmark’s
6m-strong population. The ugly upshot around limiting immigration
—however noble the motives—is that it seems acceptable to be
nasty about immigrants. As a class they are spoken of as a “threat”,
an inconvenience to be dealt with. Disdain for Muslims seems tacitly
endorsed by officialdom, as if each were a potential rapist or
benefits cheat. Refugees with proven fears of persecution are
expected to learn Denmark’s language and adopt its customs—but
face being kicked out at any minute. Such an us-versus-them
approach is corrosive to a country’s sense of citizenship. How can
people embrace a society that holds them in contempt? Denmark
may have done a better job than others of grasping that migration
comes with costs. But it risks shattering the social cohesion it is
trying to preserve. ■

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Britain
British stocks and bonds look like a bargain
Cheap and cheerful :: Liz Truss is, still, partly to thank. Labour hasn’t helped either

British labour is a bargain

Cheap workers :: Thank Brexit and stagnant wages

Britain’s public finances are bad. Their

future looks worse
Pension pothole :: A cherished pension policy poses a hefty fiscal risk

The court that could thwart Wimbledon’s

ambitions to grow
Advantage: NIMBYs :: What hope for the rest of Britain?

David Lipsey, former Bagehot columnist,

died on July 1st
Bagehot, and so much more :: Also a political adviser and Labour peer, he led the
fullest of lives

Macron beats Trump to London

France and Britain :: A royal welcome for a republican president

Where are all the briefcase wankers?

Bagehot :: The nerd:jock ratio in government is askew

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Cheap and cheerful

British stocks and bonds look

like a bargain
Liz Truss is, still, partly to thank. Labour hasn’t helped either
7月 10, 2025 07:13 上午

PUTTING MONEY into an emerging market always carries a frisson

of danger. Governments might make sudden, erratic decisions,
sending investments plummeting. That risk also makes those assets
cheaper, to draw in willing buyers. British assets, too, have started to
look cheap in recent years, at least compared with those of other
rich countries. Last week’s spectacle in the House of Commons,
where the Labour government was cowed by its own backbenchers
into withdrawing a fairly minor cut to disability benefits, then briefly
pummelled by the bond market as a result, helps explain why.

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The ongoing public displays of Britain as a basket case were not part
of the pledge by Sir Keir Starmer, the prime minister, to “stop the
chaos” of his Tory predecessors but it has made Britain interesting
for some investors. Gilts (government bonds) now offer higher yields
than those of any of Britain’s economic peers. The term premium on
gilts—economists’ estimate of the extra compensation required for
buyers to invest in long-dated debt, a proxy for risk—has risen
sharply over the past years and is now notably higher than in
America, the euro area or Japan (see chart 1).

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Moments of panic in the gilt market have become more frequent.
Although nothing recent compares with the stress of the brief and
disastrous premiership of Liz Truss in the autumn of 2022, yields
jumped in October after the Labour Party’s first budget increased
annual borrowing by around £30bn ($41bn). They rose again in
January, as anxiety around Donald Trump’s plans pushed up global
bond yields. Britain’s fragile fiscal position left it particularly exposed.
Last week’s mess fits into that pattern. Each jolt has subsided
eventually; in the most recent episode Sir Keir was forced to confirm
awkwardly that Rachel Reeves, the chancellor, was secure in her job,
lest investors conclude she would be replaced by someone happier
to borrow. But in the background, bond yields have cranked up
further, and faster, than in nearly all similar countries.

British stocks have fared poorly, too. Shunning Britain in favour of

America has been a stunningly good trade since the early 2010s. For
most of that period, Britain’s soggy performance reflected the types
of companies that chose to list there. Slow-growing firms such as
banks and mining companies are overrepresented whereas
technology ones are underrepresented, relative to America. Shuffle
the sectoral weights on an index of British equities to match
America’s, and much of the valuation gap vanishes (see chart 2). But
over the past years British equities have started to carry a valuation
discount even after accounting for those differences, suggesting a
problem with Britain itself.

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One theory, which this government and its predecessors have flirted
with, is that this is the fault of investors. Britons invest too little of
their capital, especially their pensions, at home. That, so the
argument goes, starves companies of capital and puts gilts at the
mercy of flighty, fickle foreign capital. Various schemes have been
floated to bribe or compel more domestic investment. The latest is
to push British pension funds into holding a higher share of British
private assets.

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For most assets, particularly stocks, that logic does not stack up.
Appropriately attractive assets should not struggle to pull in
investors, regardless of whether they come from Britain or abroad.
The timing of the cheapening of British assets does not line up with
that theory either. Ownership of British stocks shifted from mainly
domestic to mainly foreign in the 1990s and 2000s, yet throughout
that period they performed in line with stocks in America and
Europe, before lagging during America’s tech-fuelled boom in the
2010s.

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There was, though, a step-change in how British assets behaved
during the Truss premiership in 2022. Around then, the sector-
adjusted valuation gap between British and American equities
started to rise from 10-15% to 25%. (America’s AI boom doubtless
contributed.) And the way British assets moved from one day to the
next started to evoke an emerging market. A previously uncommon
pattern of stocks, bonds and sterling all losing value on the same
day—meaning investors wanted to dump all British assets, not
merely shuffle between them—has become more frequent (see chart
3). A similar change occurred around that time in the euro area,
suggesting the supply crunch from rising energy prices also played a
role, but that effect was smaller and less persistent.

Investors fear that another Truss-sized blow-up is no longer a

ridiculous notion. The Labour Party has argued that, since it won
power last July, such fears are misplaced and that Britain is now a
haven of stability in a sea of chaos. The government has persuaded
a few prominent investors, notably BlackRock’s Larry Fink, to echo
that view. If they are right, and British assets are pricing in the risk
of a blow-up that will not materialise, now would be an excellent
time to “buy the dip” in Britain.

That would require the government to do a far better job at

establishing its fiscal credibility. Even if it does, the looming threat of
a cash-splashing populist government run by Nigel Farage, whose
party, Reform UK, is leading in the polls, could spoil things. So far,
the bargain-basement pricing in British assets suggests that markets
are not yet persuaded.■

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Cheap workers

British labour is a bargain

Thank Brexit and stagnant wages
7月 10, 2025 07:12 上午

SUCCESS STORIES in the British economy have been rare of late.

But there is one notable exception: the boom in selling services
abroad. Over the past decade, Britain’s services exports have grown
by around 45% in inflation-adjusted terms, even as the wider
economy grew by only 11%. America has been a particularly good
customer. British services-export volumes across the Atlantic are up
by 70% compared with 2016 (see chart 1).

Several things have fuelled this rise, some old, some new. Britain
has always benefited from a well-educated and English-speaking
workforce that sits in a favourable timezone for working with both

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Asia and the Americas. A specialisation in easily traded professional
services proved to be a boon as work moved online following the
covid-19 pandemic.

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Most important of all, Britain is cheap. Real wages fell for years after
the financial crisis and have been slow to recover. Sterling took a
beating after the Brexit referendum. That adds up to an appealing
proposition for would-be foreign outsourcers. As recently as 2014,
average weekly earnings in Britain were near-equivalent in US dollar
terms to those in America. Today American wages are 30% higher
(see chart 2).

Firms have noticed. JPMorgan Chase, a bank, moved some of its

digital operations to a big new office building in Glasgow last year.
Mark Napier, its Glasgow head, lays out the economic case. In terms
of salaries Glasgow-based coders sit mid-way between the bank’s
lower-cost American outposts (Texas, not California) and its
operations in India—but if anything, slightly closer to India. Over the
years, that comparison has moved in Glasgow’s favour. A coder in
India once cost about a quarter of a Glaswegian equivalent, now it’s
over half. About a third of JPMorgan’s Glasgow-based work is now
for its American division. Goldman Sachs, another bank, set up stall
in Birmingham in 2021 after commissioning a search across Europe
for a mid-priced city with a deep talent pool.

Alexander Mann Solutions (AMS), a British recruitment firm, runs

part of its American operation from Belfast. The five-hour time
difference with the East Coast is a little inconvenient, but labour is
almost 40% cheaper than in America, says Nicola Hancock from
AMS. The firm does have to brief its offshore recruiters that British
vagueness doesn’t always land well across the Atlantic, where
business culture is more literal and to-the-point, she adds.
Americans also do not always know what “half past one” means.

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Britain’s particular strength lies in the vaguely named category
“other business services”, encompassing consultants, lawyers,
public-relations types, accountants and more—what the post-covid
generation might call “email jobs” (see chart 3). Along with finance
and insurance, these account for two-thirds of the rise in Britain’s
services exports since the Brexit referendum. The split with the EU,
paradoxically, encouraged the services boom by crushing sterling,
making British salaries cheaper for foreigners. Goods exports, which
are more directly affected by post-Brexit trade barriers, are over
10% lower in real terms over the same period.

Although those sectors have tended to be concentrated in London,

which supplies just under half of Britain’s services exports, the
cheap-but-qualified labour proposition is often strongest in Britain’s
second cities, such as Birmingham and Glasgow. The expansion of
higher education in the 1990s and 2000s pushed up the number of
university graduates around the country, but jobs for them did not
always follow.

Research by Anna Stansbury of the Massachusetts Institute of

Technology and co-authors has found that the graduate wage
premium—the extra amount a degree-holder can expect to earn,
controlling for demography—has dropped in every region of the
country bar London. That leaves a pool of cheap talent for
multinationals such as Goldman Sachs to scoop up. Not quite the
muscle-bound factory workers that some advocates for “levelling
up”, the project of rebalancing the economy away from London,
typically like to talk about, but a success story nonetheless.

Britain’s success in providing professional services on the cheap has

so far mostly gone unnoticed. One exception is the film business,
where Britain’s cheap and high-quality labour (plus a sprinkling of
subsidies) have lured big-budget productions such as the latest
entries in the “Mission: Impossible” franchise. Hollywood’s
complaints to Donald Trump prompted a brief flirtation with movie
tariffs, though the president now seems to have dropped the idea.

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Tariffs, then, are unlikely to disrupt much. A more plausible
candidate for concern from Britain’s perspective is artificial
intelligence. Mid-wage “email jobs” are prime candidates for
automation, if AI models become more reliable and manage to crack
the sort of multi-day and multi-week tasks that professional workers
spend most of their time on. But for now, any sort of economic win
is welcome news of the sort Britain desperately needs.■

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Pension pothole

Britain’s public finances are

bad. Their future looks worse
A cherished pension policy poses a hefty fiscal risk
7月 10, 2025 07:13 上午

THE GOVERNMENT’S books are in poor shape. Its deficit exceeds

5% of GDP and its debt ratio is close to 100%. Both—along with its
borrowing costs—are at the wrong end of international league
tables. Rachel Reeves, the chancellor, is struggling to hit her fiscal
targets, even more so after U-turns on payments to disabled people
and pensioners. Her annual Mansion House speech on July 15th will
be closely parsed for clues to how she might try.

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Yet it could be worse. According to the Office of Budget
Responsibility (OBR), it is likely to become so. The watchdog’s
annual report on fiscal sustainability, published on July 8th, calls the
risks “daunting”. In the shortish term, Donald Trump’s trade war will
hurt the economy; Vladimir Putin’s real one in Ukraine means more
defence spending. In the long term, says the OBR, if today’s policies
stay in place, by the 2070s annual borrowing may rise to 20% of
GDP and the debt ratio to 270%.

Climate change is a continuing worry: the OBR is more optimistic

than it was about the fiscal cost of net zero, but gloomier about the
economic impact of rising temperatures. But the report also dwells
at length on Britain’s pension system—and sounds the alarm.

The state pension is projected to add more to the long-term rise in

spending than anything except health care and interest payments.
Much of the extra burden comes from the “triple lock”, a guarantee
that pensions will rise each year in line with consumer prices or
average earnings, or by 2.5%—whichever is highest. Proudly
maintained by governments of all colours since 2011, the triple lock
will be ever harder to afford.

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It has already cost around three times what was first expected, due
to more volatile earnings growth and inflation. By the early 2070s,
the OBR reckons, the state-pension bill will be 7.7% of GDP, up from
5% now. Of the additional 2.7 percentage points, 1.6 are ascribed to
ageing, assuming that the average 65-year-old will by then expect to
live to 91, up from 86 today. But just as much of the OBR’s projected
rise is due to using the triple lock to raise the state pension.
(Increases in the state pension age, to 67 in 2028 and eventually to
69, push the other way.) If inflation is as volatile as in the past 15
years, the cost of the triple lock could rise by another 1.5 points. If
an earlier, calmer pattern returns, the pressure would ease (see
chart).

That said, ever fewer British pensioners rely solely on the state. That
trend should continue. Because people are now automatically
enrolled in company schemes, 86% of employees had private
pension pots in 2023, twice the share in 2012. That may make it
easier to release the lock.

But there is a complication. For years companies have been closing

defined-benefit (DB) pension schemes, in which payments are based
on salaries, in favour of defined-contribution (DC) plans, in which
they depend on investment returns. Not only are DC pensions harder
to predict; many people do not save enough in them for a decent old
age, or cannot afford to. Pensioners may need state help, even to
pay rent. By the 2040s, warns the watchdog, 17% of pensioners,
unable to afford a mortgage earlier in life, may be renting, against
just 6% today.

The pension shift may also mean costlier government borrowing.

Private-sector DB schemes hold over £600bn ($815bn), or 52% of
their assets, in British government bonds, or gilts—a good match for
their predictable liabilities. But DC schemes, with younger members
and less certain liabilities, prefer equities and other sources of higher
returns. Gilts make up just 7% of their assets. Lower demand for
gilts, without obvious buyers, implies higher yields.

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Governments may have to swallow that. But on the triple lock, they
have a choice, if an unpalatable one. Don’t expect Ms Reeves to find
the key. Some brave successor will have to. ■

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Advantage: NIMBYs

The court that could thwart

Wimbledon’s ambitions to
grow
What hope for the rest of Britain?
7月 10, 2025 07:13 上午

ON WIMBLEDON’S COURT NO 1 Taylor Fritz, an American player,

faced Karen Khachanov, a Russian. A mere seven miles away, in
Court 68 of the Royal Courts of Justice, another duel was under way.
It paired tennis, a pastime England invented, with one it has
elevated to an art form: planning litigation.

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On one side was Russell Harris KC, a doyen of the planning bar,
representing the All England Lawn Tennis and Croquet Club, the host
of the world’s most famous tennis championship. On the other,
Sasha White KC, his dashing chambermate, representing Save
Wimbledon Park, a group of residents who live nearby. They had
raised nearly £140,000 to bring the case.

Wimbledon wants to expand. Under plans approved by the Mayor of

London’s office last September, the club’s grounds would more than
double in size, with 38 new tennis courts and an 8,000-seat stadium.
The land is a former private golf course, the freehold for which was
bought in 1993. To sweeten the deal, the club promises to smarten
up a neighbouring public park and lake, and give tickets to local
children.

But as so often with grand designs in Britain, a judicial review stands

in the way. Mr White told the High Court that the scheme did not
clear the bar for building on land that is subject to “some of the
most restrictive planning constraints possible” and that would require
“very special circumstances” for approval. Moreover, he said in a
written submission, the GLA erred in treating the plans as “sports
and recreational provision”, since the business of Wimbledon is the
“commercial exploitation of tennis” rather than creating space for
amateurs.

But the legal arguments are a proxy. The real dispute is over growth,
and the future of Wimbledon as a big player in the global sports
industry. The mayor’s office had bought the argument that it would
fall behind rival Grand Slam tournaments in Australia, France and
America unless it could expand. Only Wimbledon holds its qualifying
matches off-site, two miles away in Roehampton. Its third and fourth
courts are smaller than its peers’, and the walkways get crowded. A
bigger venue would mean more fans, and more money for
grassroots tennis, the club argued.

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For the objectors, such ambition is precisely the problem. “We all like
Wimbledon—but we like Wimbledon the way it is,” says Simon
Wright, a 68-year-old supermarket supplier, who led a noisy
demonstration outside court dressed as a strawberry. TikTok has
swollen the crowds to something like a festival, he says. “The strap
line for Wimbledon is ‘Tennis in an English garden’. This is more like
tennis in an industrial complex.”

In this contest, Wimbledon is a microcosm of the British economy.

Britain is a host more than a player: it produces few tennis
champions but international stars flock to south-west London
because it has unrivalled tradition and hospitality. Japanese business
wonks termed this the “Wimbledon effect”: a place can become a
global hub of activity even if it has few domestic giants—much as
the City of London became a magnet for foreign banks, and Oxford
and Cambridge home to oodles of foreign brains. But Britain cannot
earn a living off a genteel image of strawberries and champagne for
ever; if forums cannot grow, they will be overtaken. And Wimbledon,
like many other national assets, is kept artificially small by a girdle of
planning law.

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The Labour government promises to cut through this regulatory
thicket, and to allow data centres, pylons and gigafactories. In
particular, it intends to reduce the volume of judicial reviews. The
rhetoric is promising, but a country that prevaricates over whether
Wimbledon can play more tennis will struggle to become one that
builds nuclear-power stations.

As Mr White entered the second hour of his argument before Mr

Justice Saini, the stamina of some of the objectors was tested.
Yawns were stifled; eyelids drooped; chins rested on chests. They
will need their energy: the group has brought a separate challenge
over the legal status of the land, to be heard in January. ■

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Bagehot, and so much more

David Lipsey, former Bagehot

columnist, died on July 1st
Also a political adviser and Labour peer, he led the fullest of lives
7月 10, 2025 10:48 上午

BY THE TIME David Lipsey joined The Economist in 1992, he was

well into his second career. The first was in politics, advising Anthony
Crosland, a Labour intellectual and heavyweight, in opposition and
then government. After Crosland (“my chum, my mentor and my
idol”) died in 1977, David worked for the prime minister, James
Callaghan, until Labour’s trouncing at the polls in 1979.

He was already a phrase-turner. While in Downing Street he

borrowed “winter of discontent” to describe the miserable, strike-

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ridden months before the fall—and thus “helped legitimise all Tory
election campaigns ever since”. “New Labour”, he claimed, was also
his, though the “Croslandite egalitarian” disliked what it came to
stand for.

As a journalist, David did not just write for newspapers, including the
Sunday Times and the Times before The Economist. He also co-
founded one. Alas, the Sunday Correspondent lasted only 14
months, folding in 1990.

He was delighted that much of his first editorial meeting here was
spent chewing over economic theory. His Bagehot columns showed
his insider’s experience, but giggles (both his and the reader’s) were
never far away. One column won an award, but not for him: a
schoolboy pinched it for a prize offered by the Guardian. David was
forgiving. Had the piece come second, he said, he might have been
less so.

When The Economist endorsed the Conservatives in the election of

1997, he was disappointed. Still, Labour’s landslide was a consolation
—as was his triumph in the office sweepstake. Too close to the new
government to continue as Bagehot, he became social affairs editor,
working part-time. He left in 1999 to become a Labour peer.

His third career was even busier than his first two. Lord Lipsey of
Tooting Bec sat on commissions on care for the elderly, electoral
reform and funding the BBC (all frustrating in different ways). He
oversaw greyhound racing (and named his own greyhound, Tooting
Becky, after his daughter). The turf was a passion. So was harness
racing, which he took up in his late 50s—even winning a couple of
races. ■

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France and Britain

Macron beats Trump to

London
A royal welcome for a republican president
7月 10, 2025 07:12 上午 | LONDON AND PARIS

Boris? Donnez-moi un break

WHEN SIR KEIR STARMER sat down with Donald Trump at the
White House in February, the British prime minister handed over a
letter from King Charles III inviting the American president for a
state visit to Britain. On July 8th a foreign president set foot in
Britain for the first state visit the king has hosted this year. Yet the
guest was not Mr Trump but President Emmanuel Macron of France.

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The three-day visit by Mr Macron, who was treated to full pageantry,
was heavy in symbolism, and not just because the French got there
first. For Sir Keir, who has just sealed a “reset” with the European
Union, it was a chance to repair the cross-Channel tie after the
damage done by Brexit. And it was an opportunity to look
statesmanlike and worldly; a welcome distraction from his domestic
woes. He is treading a delicate line, trying to fix links with Europe
while keeping close to America. But whereas France-bashing is a
national sport for the British tabloids, public support for France is
surprisingly high.

Since the Brexit referendum vote in 2016, the cross-Channel

relationship has often ranged from frosty to glacial. The British were
convinced that Mr Macron was out to punish them for leaving, and
weakening, the EU. The French, snubbed in 2021 by the AUKUS
submarine deal between Australia, America and Britain, which
binned a Franco-Australian contract, concluded that Britain was not
to be trusted. Liz Truss, fleetingly prime minister, even refused to say
whether Mr Macron was a “friend or foe”.

The state visit, which included a summit of the two governments,

marked a turning of the page. In a speech in English to a packed
joint sitting of Parliament in Westminster, Mr Macron urged the two
countries to use their shared commitment to democracy, sovereignty
and international law as the basis for standing “shoulder-to-
shoulder” against those who seek to undermine it. “Let’s not allow
the Channel to grow wider”, he urged.

This rapprochement was cemented by two events. One was Sir Keir’s
arrival in Downing Street. He and Mr Macron make an unlikely pair,
united by little more than domestic political woes. Sir Keir is stiff,
plodding and lawyerly; Mr Macron is tactile, over-cerebral and
buzzing with ideas. But the French remember that Sir Keir
campaigned against Brexit, and secured a meeting with the
president well before the general election. Mr Macron speaks
privately about a “special path” they are forging. The other change

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was the return of Mr Trump. This has pushed Atlanticist Britain and
Gaullist France, used to looking in opposite directions, closer
together. The bilateral relationship, says Lord Ricketts, a former
ambassador to Paris, “is certainly the best it’s been since Brexit”.

The most strategic part of the visit concerned defence and security
in Europe. Britain and France are not the whole story. Germany’s
massive planned rise in defence spending will shift the continent’s
balance of power, as Poland’s emerging might already has. But
Britain and France are Europe’s only nuclear-armed powers (and
permanent UN Security Council members). Mr Macron spoke of “a
new stage” in co-operation, 15 years after the bilateral Lancaster
House defence treaties were signed. These state that a threat to the
“vital interests” of one country is a threat to those of the other. At
the summit, Britain and France for the first time agreed to “co-
ordinate” the use of their nuclear weapons, stating that “there is no
extreme threat to Europe that would not prompt a response by both
nations.”

On Ukraine, after disappointment at the recent NATO summit where

it barely got a mention, the two leaders reaffirmed their support. Mr
Macron and Sir Keir have been leading an effort to put together a
“reassurance” force for Ukraine, and jointly chaired another meeting
to this end at Northwood military headquarters on July 10th. Such a
force would be dispatched only in the event of a ceasefire with
Russia, which does not look close. But the effort shows a willingness
by both sides to think differently about collective security. It has
tightened ties between the two armed-forces chiefs, so much so that
a British officer refers to a “love-in”. Cross-Channel co-operation
between the two countries’ intelligence services, including their
chiefs, is also particularly good.

For all this bonding, points of friction remain. One is that plans for
joint defence projects inevitably run up against industrial rivalry, as
well as uncertainty over the level of British access to EU
procurement funds. Another is Britain’s frustration that France does

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not try harder to stop migrants boarding small boats on its coast,
despite new efforts by the French police—conveniently caught on
camera for the British papers—to intervene in shallow waters.
Migrant crossings reached a new record in the first half of 2025.
Britain sought to secure a “one in, one out” deal at the summit to
return such migrants to France.

Despite such tensions, though, the two countries seem closer than
they have done for a long time. “What has been achieved in a year
is really impressive,” says Mujtaba Rahman of Eurasia, a risk
consultancy. In British focus groups, says a political strategist,
“partnership with Europe, including France, now seems
natural.” Once the tiaras and carriages have been put away, the two
countries will face the hard grind of putting into place their ideas for
enhanced European security—and finding the money for it. But at
least they will be trying to do so, increasingly, hand-in-hand. ■

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Bagehot

Where are all the briefcase

wankers?
The nerd:jock ratio in government is askew
7月 10, 2025 07:13 上午

“THE INBETWEENERS”, a cult sitcom broadcast between 2008 and

2010, has a surprising hold over British politics. It followed the lives
of four teenage boys, offering an amusing portrait of the often
psychopathic cruelty of British teen boys decades before
“Adolescence” did it on Netflix without the jokes. Will McKenzie, a
nerdy boy holding a briefcase, arrives at a new school and within
seconds is dubbed a “briefcase wanker”.

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It is this phrase that lives on in Westminster, which is riddled with
millennials who came of age when the sitcom was on screen. The
hard left deride Sir Keir Starmer’s party as “Briefcase Labour”—
technocratic dweebs more interested in policy than politics. Some
MPs, meanwhile, complain to the Sunday Times about “ultra loyalist
briefcase wankers who have been practising their maiden
speeches...since they were ten”. If only. A good government is an
alliance between nerds and the jocks who used to bully them at
school. In this government, the nerd:jock ratio is off. Far from too
many briefcase wankers, Labour has too few.

After all, a lack of policy thinking is the main reason Labour finds
itself in such a mess, dropping ever lower in the polls. In the run-up
to the election, jocks held sway over nerds. Thought-through policy
proposals were not a necessity but a threat (what if they appeared
in the Mail on Sunday?). Often those who had done some thinking
about how to run a Labour government were not offered jobs in it. A
year on and Labour is still dominated by people more interested in
winning an election than running the country well, as if the former is
unconnected to the latter.

Likewise, Labour MPs may resent it when the briefcase wankers in

their ranks point out that more borrowing is unaffordable. But the
briefcase wankers are right. Many new Labour MPs are children of
“zirp”—the zero-interest-rate policy era, which began when “The
Inbetweeners” was broadcast. Having become an adult when
borrowing was free, Labour MPs govern when money is expensive.
The insults have not moved on; interest rates have.

Part of the problem is that the dominant folk memory of the last
time Labour was in power is wrong. The New Labour era is
remembered as a period of swaggering jocks, charming or bollocking
journalists until they wrote something nice about Sir Tony Blair. For
that, blame “The Thick of It”, another noughties sitcom set in the
period, which also still shapes British politics.

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But Sir Tony’s government was a nerd-led project as much as a jock
one. Correspondents from that era were drowned in documents.
Government churned out chunky reports, such as one on gun crime
that contained the thoughts of 81 criminals. Sometimes they were
boring and finicky, but that was the point. Briefcase wankers rose
fast. David Miliband, who wrote the 1997 manifesto, would later
become an MP, foreign secretary and leadership contender. By
contrast, Rav Athwal, who wrote the 2024 manifesto, left this
summer after less than a year in office.

Now only the caricature of New Labour remains, with macho briefing
against the weedier elements of the Labour Party. Outriders call for
Sir Keir to embrace “Hard Labour”, a vision that ditches progressive
shibboleths (such as net zero, which Labour voters like) for more
macho ones (such as slashing foreign aid, which Labour voters do
not like). Sir Keir, a former human-rights barrister from north
London, jokes he is a “hard bastard” in interviews, coming across as
Jay from “The Inbetweeners” who once claimed to have cycled a
pedalo to Africa.

Even wet social democrats in cabinet face criticism from Labour’s

self-appointed hard men. Any lull in conversation among the Labour
right is filled with: “Shall we try to kill Ed Miliband?” Mr Miliband is,
after all, comfortably the nerdiest cabinet member (indeed, one wag
noted that the young Mr Miliband looked like all four Inbetweeners
at once). Yet he is also easily the most effective, for good or ill.
Some ideas are bad (yet more handouts for fuel during winter) while
others are good (committing funding to nuclear power in Suffolk).
Briefcase wankers can prevail.

Ideally, government works best when nerd and jock are in sync
rather than at war. The best politicians combine a nerdy interest in
policy with the jockish drive to push it through. Unfortunately, Sir
Keir possesses neither. To his allies, the prime minister is more
concerned with output, rather than input; to his critics, the prime
minister has little interest in policy at all. One week Sir Keir is a hard

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man, dishing out tough truths to his party on immigration; the next
he is a soft boy, apologising for his own words. At best, he is
programmable. At worst, he is a pot plant—an inanimate object to
be shunted around by advisers.

Completed it, mate

Nerds can struggle to be heard. “Briefcase wankers don’t brief,” said

one briefcase wanker, briefing. It is a structural problem that goes
beyond Labour. Britain’s special adviser (SPAD) class is
underpowered, sometimes lacking quality and always lacking
quantity. Labour employs about 120 SPADs. It could easily employ
ten times that. Even a lowly junior minister, responsible for, say,
schools could do with half a dozen, rather than one or two. All but
the most talented ministers are overwhelmed by departmental
inertia because they do not have the manpower to push back.

Nihilism is growing among Labour’s nerds. Perhaps whatever

achievements New Labour managed came about due to a wall of
money, rather than all those PDFs. Such pessimism can become self-
fulfilling. Labour is the last chance for sweeping incrementalism.
Other more chaotic projects are waiting should the party fail. Sir
Keir’s project is one of improving the lives of voters—little by little,
spreadsheet by spreadsheet—in the hope they will both notice and
thank the government. It is an uninspiring vision, but it is all they
have. Only the briefcase wankers can save them now. ■

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which brings together the best of our leaders, columns, guest essays
and reader correspondence.
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International
Putin’s war in Ukraine may cost him control
of the south Caucasus
At the crossroads of empires :: The prospects of peace between Azerbaijan and
Armenia are weakening Russia’s influence

The 19th century is a terrible guide to

modern statecraft
The Telegram :: A world carved up between Presidents Trump, Xi and Putin would be
unstable and unsafe

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At the crossroads of empires

Putin’s war in Ukraine may

cost him control of the south
Caucasus
The prospects of peace between Azerbaijan and Armenia are
weakening Russia’s influence
7月 10, 2025 09:36 上午 | BAKU, YEREVAN AND ANKARA

FOR MOST people, geopolitics is an abstraction. For those living in

the south Caucasus, which consists of Azerbaijan, Armenia and
Georgia, it is a daily experience. The region between the Black and
Caspian seas, Europe and Asia, sits at the crossroads of old empires:
Ottoman, Persian and Russian. Situated alongside the belligerents of
today’s most dangerous wars—Russia’s against Ukraine and the

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Iranian-Israeli conflict—it illustrates like few other regions the rise of
middle powers and retreat of big ones.

These two wars are redefining the region more consequentially than
anything since the collapse of the Soviet Union, which showed its
first cracks here in the late 1980s. Mr Putin’s war against Ukraine
inadvertently led to an end to the hitherto intractable conflict
between Azerbaijan and Armenia, which is now struggling to break
free of Russia’s grip and make peace with Turkey. Meanwhile, the
conflict between Israel and Iran has boosted the status of oil-rich
Azerbaijan, the largest and militarily strongest of the three countries,
as an ascending regional power, able to stand up to its bigger
neighbours. Backed by Turkey and Israel, which sees it as a strategic
ally in its conflict with Iran, Azerbaijan is contemplating joining the
Abraham Accords. Only Georgia, once the darling of the West, is
moving in the other direction as it slides into an ugly, anti-Western
autocracy aligned with Russia.

“We live in a windy place,” says Elchin Amirbayov, a special

representative of Ilham Aliyev, Azerbaijan’s president, of the changes
sweeping the region as he looks over the Caspian Sea from a
swanky office in Baku, the capital. A whirlwind of high-level
diplomacy reflects the change.

On July 10th, as The Economist went to press, the leaders of

Armenia and Azerbaijan—which have been at war for over 30 years
—were meeting for their first-ever direct talks without any mediators
or intermediaries. That follows a historic visit last month by Nikol
Pashinyan, Armenia’s prime minister, to Istanbul, where he was
ceremoniously received by President Recep Tayyip Erdogan.
Influential recent visitors to the south Caucasus have included Steve
Witkoff, Donald Trump’s special representative; Masoud Pezeshkian,
the president of Iran; and Kaja Kallas, the EU foreign-policy chief.

What happens next will be felt far beyond the region. Peace between
Armenia and Azerbaijan would integrate Armenia into the so-called

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“middle corridor” for trade and energy that links China and Central
Asia to Europe, bypassing Russia. That is particularly vital for
Europe’s energy security because Georgia is becoming a less reliable
partner.

Russia is trying to stop this by putting pressure on the south

Caucasian trio, which it still sees as being in its sphere of influence.
Yet the speed of Russia’s loss of clout is striking, considering the
dominant position it had gained five years ago as the result of a 44-
day war between Armenia and Azerbaijan over Nagorno-Karabakh

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and its surroundings—Azerbaijani territory that had been occupied
by Armenia since the early 1990s (see map).

The enclave’s occupation, like many of the other “frozen” conflicts in

the former USSR, had been a key element in Russia’s influence. Yet
when Azerbaijan attacked to take it back in 2020, Russia refused to
help defend Armenia, partly in retribution for a popular uprising two
years earlier that had swept Mr Pashinyan, a democrat, to power,
and partly as a chance to deploy Russian troops elsewhere in the
region.

Mr Putin allowed Azerbaijan to take some territory around Nagorno-

Karabakh, before imposing a ceasefire that allowed Russia to put
troops in Azerbaijan under the guise of peacekeepers, and which
made Armenia more vulnerable and dependent on it. The armistice
agreement also aimed to re-establish transport connections in the
region by creating a road and rail link that would cross sovereign
Armenian territory to connect the main part of Azerbaijan with
Nakhchivan, Azerbaijan’s exclave bordering Iran and Turkey. Most
importantly, however, Mr Putin imposed a condition that the FSB,
Russia’s security service, control the corridor.

Peace without keepers

Yet all these machinations unravelled after Mr Putin’s full-scale

invasion of Ukraine in 2022. In 2023, with Russia distracted by its
own war, Azerbaijan recaptured all of Nagorno-Karabakh in less than
24 hours, while Russian peacekeepers stood impotently by. With no
pretext for them to stay, Russia was compelled to withdraw them.
Buoyed by its victory, Azerbaijan “sought to deal with Moscow as an
equal, not as a subordinate, thus challenging Russia’s view of the
south Caucasus as its playground”, says Zaur Shiriyev, a Baku-based
expert at the Carnegie Endowment for International Peace, a think-
tank.

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Azerbaijan has flexed its muscles more of late, making clear that it
does not want the FSB to control the corridor between two parts of
Azerbaijan. Instead it wants it to be administered by a neutral
international body, possibly involving America. Russia’s declining
influence in the region is a worry for Mr Putin, who has intensified
plans to build sanctions-proof transport links through it, such as a
rail line to Iran, an important supplier of arms to Russia for its war
against Ukraine and for any potential conflict against the West.

Soon a new spat ensued involving Azerbaijan’s roughly 2m-strong

diaspora, when Russian police rounded up some 50 ethnic
Azerbaijanis in the Urals, linking them to a 20-year-old unsolved
case. Two Azerbaijani men were tortured and beaten to death during
the arrests.

Azerbaijan retaliated, storming the office of Sputnik, Russia’s state

propaganda outlet, and detaining two employees it accused of being
FSB agents. (Russia denies this.) Its security forces also arrested and
beat up eight Russians who had moved to Baku after Russia invaded
Ukraine.

The leader in Baku cares about human rights as little as Mr Putin

does, but the row put a nail into the idea of Russia’s military
presence in the transport corridor between Azerbaijan and Armenia.
The dispute between the two autocrats may subside. But the
inherent tensions between an emerging regional power and a former
imperial master will not. Azerbaijan, which is armed by both Turkey
and Israel, is too powerful for Russia to fight openly. So Mr Putin’s
best hope to regain influence may be through Armenia, which
depends on Russia’s energy and food imports, and where Russia still
has a military base.

What Russia lacks in Armenia, however, is popular support. Having

been so overtly betrayed, few Armenians see Mr Putin as an ally. Yet,
paradoxically, the loss of Nagorno-Karabakh and the exodus of
100,000 ethnic Armenians from the disputed territory—painful as it

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was—has also liberated Armenia from a conflict that had shut its
border with Turkey, had forced it to outsource its security to Russia
and also made its politics hostage to the Nagorno-Karabakh clans
that had close ties with Moscow. “Armenia was de facto a half-colony
of Moscow, which treated it as an asset in its relationship with
Turkey and Azerbaijan,” says Mikayel Zolyan, a historian and analyst
in Yerevan, Armenia’s capital.

Since losing the war with Azerbaijan, Armenia has been trying to
break free of Russia’s influence and draw closer to the EU. More
important, it has intensified attempts to normalise its relationship
with Turkey, which had been poisoned by the memory of the
genocide of Armenians inflicted by Ottoman forces in 1915-16.

Mr Pashinyan has tried to move Armenia beyond its trauma and

lament for the loss of its historical homeland, symbolised by mount
Ararat (now in Turkey). He has emphasised “reconciliation over
resentment”. Areg Kochinyan, the head of a security think-tank in
Yerevan, says Russia was long viewed in Armenia as its only
protection against Turkey. Now it is Russia that is viewed as a threat.
Reopening the border between Turkey and Armenia, which has been
closed since 1993, would cement Turkey’s role as the “rising star in
the south Caucasus” and the guarantor of the region’s security, says
Mr Kochinyan. Turkey, however, seems reluctant to reopen the
border without the consent of Azerbaijan, which has also invested
heavily in Turkey.

Azerbaijan is stalling and imposing new demands. It wants Armenia

to hold a referendum to remove a residual claim to Nagorno-
Karabakh from its constitution. And it wants unimpeded access
through southern Armenia to Nakhchivan. These demands reveal not
only Azerbaijan’s deep-rooted mistrust of its former foe, but also its
economic insecurity. Despite all its oil riches, Azerbaijan’s GDP per
person is below that of Armenia, which has none of its natural
resources.

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No time to lose

Yet these demands risk scuppering the deal. Armenians would be

more likely to agree to a constitutional change after they have seen
the benefits of trade and open borders, than before. Armenia wants
to synchronise the opening of the Armenia-Turkey border with the
agreement that would establish a corridor across its territory, even if
this comes before a formal peace agreement with Azerbaijan.

Privately Ilham Aliyev, the president of Azerbaijan since 2003, knows

that Mr Pashinyan is the best Armenian partner he could have in
trying to strike a peace deal, yet publicly he has not shown him any
support. Azerbaijan risks destabilising Armenia, a country a third of
its size, by putting unnecessary pressure on it even as it is being
menaced by Russia.

Mr Putin’s government has spared no effort to get rid of Mr

Pashinyan, who faces elections next year, one way or another. It is
hoping for the repeat of the Georgian scenario, in which Bidzina
Ivanishvili, a Moscow-friendly oligarch, and the church, halted the
country’s Westward trajectory and delivered it into Russia’s orbit. In
June Mr Pashinyan said his government had foiled an attempted
coup planned for September. It arrested Samvel Karapetian, a
Russian-Armenian billionaire, on charges of making public calls to
seize power in the country illegally, which he denies. Margarita
Simonyan, the boss of RT, another Russian propaganda channel,
called Mr Pashinyan an “Antichrist” and traitor to ethnic Armenians
such as herself.

Russia’s malign activity both in Azerbaijan and in Armenia adds

urgency to the peace process, says Mr Shiriyev. The window of
opportunity is narrow. Missing it could throw the region once again
into dangerous geopolitical uncertainty. ■

Correction (July 10th 2025): This article has been amended to clarify
that direct talks between the leaders of Armenia and Azerbaijan

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were the first without any mediators or intermediaries.
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him-control-of-the-south-caucasus

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The Telegram

The 19th century is a terrible

guide to modern statecraft
A world carved up between Presidents Trump, Xi and Putin would be
unstable and unsafe
7月 10, 2025 07:13 上午

SOME 120 years on, few remember the outrage provoked by the
awarding of the Nobel peace prize to Theodore Roosevelt, the 26th
American president and, to his critics, a might-makes-right, America
First bully. That fuss offers lessons for the present.

Roosevelt saw stability in a world carved into spheres of influence

that balanced the interests of big powers. He earned his 1906 Nobel
—the first won by an American—by brokering a peace treaty that

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rewarded Japan for a war launched on Russia without warning.
Morality was not his guide. Roosevelt was “thoroughly pleased”
when Japan sank much of Russia’s navy, for he saw Russia as the
main obstacle to American ambitions in Asia. Still, he aimed to avoid
Russia’s total defeat. Once safely weakened, Russia would be a
useful check on Japan’s rise. Envoys from both powers were
summoned by Roosevelt to cut a deal in which Russia handed
swathes of modern-day China to Japan: the “balance of power” at
work. In this chilly system, perfected in 19th-century Europe, large
countries seek security by limiting the ability of one power to
dominate all others. The same system seeks to limit conflicts by
paying heed to the core interests of big states, especially in their
neighbourhoods. Small countries do what they are told.

Liberal-minded Europeans were appalled by Roosevelt’s Nobel. They

called him a “military mad” imperialist. They recalled his assertion in
1904 of an American sphere of influence from the Arctic to Cape
Horn, including an “international police power” to intervene
anywhere in the western hemisphere. Roosevelt’s declaration built
on the Monroe Doctrine, a 19th-century warning to European
colonial powers to stay clear of the Americas. Roosevelt meant what
he said, sending troops to foment revolution in Panama, and to grab
territory there for an American-owned canal.

President Donald Trump’s fans detect thrilling parallels, and not just
because Mr Trump covets his own Nobel prize. To America Firsters,
spheres of influence are a smart response to a world of problems
that America cannot fix, and should not have to.

Mr Trump certainly seems to take a 19th-century view of the

western hemisphere. He wants America to own ports at each end of
the Panama Canal, which currently belong to a Hong Kong-Chinese
conglomerate. And he is hostile to Chinese-funded infrastructure
across Latin America. In 1895 it was Britain that angered America by
trying to build a telegraphic-cable station on an island near Brazil,
and by claiming land at the mouth of the Orinoco river in Venezuela.

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President Grover Cleveland’s secretary of state successfully browbeat
his British counterpart into backing off, explaining: “Today the United
States is practically sovereign on this continent, and its fiat is law.”
As for Greenland, American governments first talked of buying that
cold island in 1867, though Mr Trump’s preferred excuse—that
America must keep Greenland’s minerals out of Chinese hands—is
new.

If Mr Trump cedes a sphere of influence to Russia’s president,

Vladimir Putin, MAGA types would stand ready to defend him.
America Firsters agree with Mr Trump that Russia had a right to feel
menaced by NATO enlargement. Jump to Asia, and some Trump
loyalists even sound ready to accommodate China’s core interests.
Donald Trump junior, the president’s eldest son, wrote in February
that an America First foreign policy should seek “a balance of power
with China that avoids war”, by “avoiding poking the dragon in the
eye unnecessarily”.

During the cold war, American- and Soviet-led blocs amounted to

spheres of influence. After the USSR fell, both Democratic and
Republican administrations repudiated such spheres as deplorable
artefacts of the past, calling instead for a liberal world order, open to
all. Mr Trump’s secretary of state, Marco Rubio, sounds less
definitive. In March he was asked whether Mr Trump’s aim is an
understanding with China, whereby the two powers avoid one
another’s backyards. Rather than denounce the very notion as
illegitimate, Mr Rubio replied that “we don’t talk about spheres of
influence” because America is “an Indo-Pacific nation” with friends
and interests in the region.

China denies wanting a sphere of influence, chiding Westerners with

a “bloc mentality” for trying to divide the world. For all that, Xi
Jinping in 2014 rejected the meddling of outsiders, saying: “It is for
the people of Asia to run the affairs of Asia.”

Speak loudly and wave a big stick around

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In fact, nostalgia for spheres of influence is misplaced. Such
compacts would not bring stability today. The 1880s were simpler in
several ways. An empire could feel (somewhat) secure once it
controlled its own set of key resources, such as coal, iron, oil,
copper, rubber and grain, as well as guaranteed colonial markets for
its industrial exports. Today, indispensable inputs are generated by
supply chains spanning many continents, and will be for years. What
is more, the contests to develop certain future technologies, from
artificial general intelligence to quantum computing, resemble
winner-takes-all arms races. Until those races are won, neither
America nor China can feel safe in its own economic sphere.
Compared with a century ago, lots of mid-rank countries are too
strong to be forced to comply, even assuming that great powers
could agree where new blocs begin and end. Poland and South
Korea have tragic histories of being divided by others. Today
politicians in both countries wonder aloud if they need nuclear
arsenals.

Mr Trump is no Teddy Roosevelt. If he were a master of Rooseveltian

statecraft that tempered spheres-of-influence policies with balance-
of-power realism, he would fear a Ukraine armistice that dangerously
strengthens Russia. Were he focused on denying China hegemony in
Asia, he would pick fewer pointless fights with allies in that region,
and plan trade wars with China less impulsively. Cynicism without
skill is no way to put America First. ■

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which brings together the best of our leaders, columns, guest essays
and reader correspondence.
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guide-to-modern-statecraft

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Business
Silicon Valley is racing to build the first
$1trn unicorn
Venturing big :: What could possibly go wrong?

Can a $9bn deal sustain CoreWeave’s

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Up in the clouds :: The AI superstar faces competition and an over-reliance on big
tech

Does working from home kill company

culture?
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big problem for Trump
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once again

Pity France’s cognac-makers

Low spirits :: They have won a respite from China, but face growing pressures in
America

On Lego, love and friendship

Bartleby :: Human relations are a useful way to think about brands

A CEO’s summer guide to protecting profits

Schumpeter :: America’s bosses are sharpening their axes

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Venturing big

Silicon Valley is racing to

build the first $1trn unicorn
What could possibly go wrong?
7月 10, 2025 07:13 上午 | SAN FRANCISCO

TWO YEARS ago, when Nvidia first joined the club of trillion-dollar
firms, plenty of investors worried that its shares were beginning to
look pricey. Yet those who happened to buy a slice of the artificial-
intelligence (AI) chipmaker at the time would since have quadrupled
their money. On July 9th Nvidia became the first ever company to
reach a market value of $4trn.

The sizzling returns enjoyed by investors in publicly traded tech

giants over the past few years has been the cause of much envy

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among Silicon Valley’s venture capitalists (VCs). It is not just Nvidia.
CoreWeave, a cloud-computing provider, has seen its market value
rise by over 300% since it listed in March·. Flush with cash and fired
up by the AI boom, many VCs are now looking to hold on to the
most promising startups for longer, hoping to ride their valuations
into the stratosphere. Some now say it is a case of when, not if,
Silicon Valley creates its first unlisted firm worth $1trn. The pursuit
of that goal is transforming how the VC industry operates—and
making a volatile business riskier still.

As recently as 2023 the VC industry was in a funk. Fully 344 unicorns

—unlisted firms worth more than $1bn—were minted in America in
2021 amid the pandemic-era funding bonanza. Two years later the
figure was just 45, as higher interest rates brought the VC industry
crashing down to earth. Many of the valuations set amid the boom
became as illusory as the mythical beasts for which they were
named. So-called zombie unicorns from that period, whose
valuations would now be far lower if VC firms were to correct them,
still haunt the Silicon Valley landscape.

Yet generative AI has sent Silicon Valley into a new frenzy that is
beginning to look even more berserk than the last. According to
PitchBook, a data gatherer, almost two-thirds of VC dollars invested
in America in the first half of this year went to AI firms. Unicorns
have given way to decacorns (worth over $10bn) and hectocorns
($100bn-plus). OpenAI, maker of ChatGPT, was most recently
valued at $300bn. Coatue, an investment-management firm, has
calculated that there are currently more than $1.3trn-worth of
private companies valued at $50bn or higher, greater than double
the level two years ago.

These rich valuations are partly the result of an abundance of

capital. Last year assets managed by American VC firms approached
$1.3trn, more than three times the level in 2015. Money left over
from the pandemic-era fundraising boom has been swiftly diverted
to AI startups. New foreign investors eager to splurge on AI, such as

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Middle Eastern sovereign-wealth funds, have been handing fistfuls of
cash to VCs, making up for the retreat of some pension funds and
endowments.

VCs have also been allocating a much greater share of their

expanding cash pile to mature startups, rather than fledgling ones
(see chart). In the first half of 2025 these accounted for 78% of the
value of VC deals, up from 59% in the same period a year before. In
a sign of the times, SoftBank, a Japanese tech investor, is throwing

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sums around that are wild even by its profligate standards.
Masayoshi Son, SoftBank’s boss, has said it will put $32bn into
OpenAI by the end of the year—more than any initial public offering
has ever raised.

The fact that startups are staying private for longer partly reflects
the preferences of founders who would rather avoid the drudgery—
and scrutiny—that comes with being listed on public markets. But
whereas VCs once used to press them to list, today they are in no
hurry, and are eager to capture more of the growth in valuations as
companies scale up.

The trouble with pushing out investment horizons is the need for
liquidity. Traditionally, VC firms have had to exit their holdings after a
few years in order to return the proceeds to those whose money
they are investing. Even before the latest bonanza, Silicon Valley’s
financiers had begun to experiment with changes to their investing
model to enable them to keep hold of startups for longer. These
efforts are being turbocharged.

One workaround is secondary tender offers, which allow early VC

backers and employees paid in equity to sell their shares without
having to wait for a public listing or another private funding round.
According to PitchBook, there were some $60bn-worth of such
transactions in the first quarter of 2025, up from $50bn in the final
quarter of last year. Still, that level of liquidity is a far cry from what
is available in public markets. Over the past month an average of
$26bn-worth of Nvidia shares have traded hands each day.

Another solution is permanent capital. Sequoia Capital, a VC

stalwart, declared the traditional ten-year fund “obsolete” in 2021,
and has since replaced it with a permanent structure, the Sequoia
Capital Fund, which combines investments in unlisted startups with
liquid stakes in public companies it has previously backed. Other
VCs, such as Lightspeed Venture Partners, have recently turned to

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continuation funds, which bring in fresh capital to allow them to hold
on to startups.

All this is changing the character of the VC industry. The largest

firms, such as Andreessen Horowitz, Sequoia Capital, Lightspeed and
General Catalyst, have ballooned in size. They now deploy tens of
billions of dollars across numerous funds, with scores of people
hunting deals.

At the same time, a small cohort of youngish firms, such as Thrive

Capital, led by Josh Kushner, and Greenoaks, led by Neil Mehta, are
competing with a different approach. They are raising sizeable funds
of their own, but are using them to back a select few companies,
with small investment teams writing big cheques to rival those of the
VC giants. Vince Hankes of Thrive, which has invested over $1bn in
OpenAI, believes that even within the firm’s relatively small portfolio
of companies, there could be more than one startup that in time will
be worth $1trn. His firm is also experimenting with a private-equity-
like model of acquiring and combining existing companies in
industries such as IT services and infusing them with AI.

The transformation of the VC industry brings risks. Writing ever

bigger cheques for companies that have yet to prove they can turn a
profit, and holding on to them in the hope that they eventually will,
raises the likelihood of enormous losses. The stratospheric valuations
enjoyed by the current generation of buzzy startups could turn out
to be as overinflated as today’s zombie unicorns were a few years
ago. A venture drought could follow. Yet the prospect of trillion-
dollar rewards makes it hard to keep the pocketbook closed. ■

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Up in the clouds

Can a $9bn deal sustain

CoreWeave’s stunning
growth?
The AI superstar faces competition and an over-reliance on big tech
7月 10, 2025 07:13 上午

EVEN BY THE mind-boggling standards of the artificial-intelligence

(AI) boom, the growth of CoreWeave is striking. Two years ago the
so-called neocloud, which rents out access to AI computing power,
was a scrappy startup generating about $200m a year in revenue
with a small fleet of data centres. Today things look rather different.
Analysts expect it to make over $5bn in sales this year. As of January
it operated 28 data centres, with ten more being added this year.

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Since it listed in March, its market value has rocketed by over 300%,
to around $75bn (see chart).

In an effort to sustain that trajectory, CoreWeave announced on July

7th that it planned to acquire Core Scientific, a cryptocurrency miner,
in a $9bn all-stock deal. The transaction gives it ready-built data
centres and power agreements with local utilities, both of which are
needed to meet ballooning demand for AI.

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CoreWeave, which also started life as a crypto miner, already leases
facilities from Core Scientific and other similar firms. The deal will
thus lower its operating costs, saving around $10bn over the next 12
years, according to the company. CoreWeave has also said that the
added scale will cut the interest rate on its borrowings by a few
percentage points. That matters because the firm has piled on debt
to fuel its expansion, including novel loans backed by the value of AI
chips. As of March it had $10.6bn of net debt, equivalent to around
six times its annualised operating profit (before depreciation and
amortisation).

CoreWeave’s rapid ascent could still be derailed, however. One risk is

competition. Although it is the biggest of the neoclouds, it has plenty
of rivals, including Lambda, one of the first AI-focused cloud
providers; Crusoe Energy, another former crypto miner; and Nebius,
which was spun off from Yandex, Russia’s answer to Google. These
other neoclouds are expanding. Lambda raised a fresh tranche of
financing in February. Nebius recently increased its planned capital
spending for 2025 by a third. Meanwhile, the cloud giants have been
busily building more AI data centres of their own. Some are cutting
prices, too. Last month Amazon Web Services, the e-commerce
giant’s cloud arm, lowered the cost of renting its AI chips by
between 25% and 45%.

That, in turn, points to a second problem for CoreWeave: its

awkward relations with the tech giants. Microsoft accounted for 72%
of revenue in the first quarter of this year. It leases CoreWeave’s
capacity as a way to serve its own cloud-computing customers when
demand outstrips what it can supply. To reduce its dependence on
its biggest customer, CoreWeave has been pursuing direct relations
with companies that need access to its computing power, including
striking a deal worth $12bn over five years with OpenAI, a big
spender with Microsoft.

CoreWeave’s relations with Nvidia, its principal supplier as well as a

big investor, make matters more delicate still. The AI-chip colossus

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wants CoreWeave to succeed because that weakens the bargaining
power of the cloud giants, which are Nvidia’s biggest customers. As
a pawn in the power games of the world’s most valuable companies,
CoreWeave could well be sacrificed if it is deemed to no longer serve
a purpose. In the long run, simply owning AI chips won’t be a
defensible “moat” for neoclouds, argues Antoine Chkaiban of New
Street Research, a firm of analysts.

That will be especially true if demand for AI cools—the third, and

gravest, risk for CoreWeave. Many companies, hamstrung by archaic
IT systems and a lack of technical talent, are struggling to make use
of the technology. Some are already quietly scaling back their
ambitions. Still, if interest falters, the neoclouds could always pivot
back to crypto. Bitcoin, after all, is trading at a record high. ■

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Work-life-balancing act

Does working from home kill

company culture?
Our analysis suggests it depends on what sort of culture bosses
want
7月 10, 2025 07:13 上午

“THIS ISN’T just about productivity metrics,” Dara Khosrowshahi,

the boss of Uber, told employees recently, after the ride-hailing
company said they should all work from the office at least three days
a week. “It’s about building the culture that will drive Uber’s next
phase of growth.” Mr Khosrowshahi is not the only boss to appeal to
such fuzzy ideas while herding workers back through the turnstiles.
In January staff at Amazon were told to return to the pre-pandemic
norm of being in the office five days a week. “People riff on top of

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one another’s ideas better when they’re together,” Andy Jassy,
Amazon’s boss, told the Harvard Business Review when asked about
the policy.

Although company culture can be a slippery concept, executives are

right to worry about it. Research suggests that a company’s values
and norms, including those governing how employees work, behave
and interact, can affect innovation, profitability and stockmarket
returns. But does forcing people into the office really improve a
company’s culture? Our analysis suggests that the answer may
depend on the type that a firm is trying to instil.

Bosses, by and large, claim that having people in the office is a

cultural boon. The spontaneity that often leads to new ideas is lost
when staff work from home. Collaboration suffers, too. A study of
61,000 Microsoft employees found that remote working in the first
half of 2020 made the tech giant more “siloed” and less “dynamic”.
It is also harder to integrate new staff.

Yet virtually all employees say they would prefer to do at least some
work at home. Mark Ma of the University of Pittsburgh and his
colleagues found that firms which insisted on workers returning to
the office after the pandemic saw job satisfaction fall and staff
turnover rise—with no improvement in firm performance.

To assess the link between firms’ working policies and their culture,
we turned first to CultureX, a research firm run by Don and Charlie
Sull. They supplied us with a database of nine corporate-culture
indicators across some 900 firms, built using feedback on Glassdoor,
a workplace-review website. (You can explore the data here.) Our
second source was Work Forward, an advisory firm that publishes
the Flex Index, a database of the remote-work policies of employers.
It sorts firms into three categories—full-time in the office, fully
flexible and hybrid.

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Combining the two databases, we found that firms which insist on
staff being in the office five days a week won better ratings from
their employees on “agility”—a company’s ability to anticipate and
respond quickly to changes in the marketplace. “If you’re in the
office,” explains Charlie Sull of CultureX, “you’re going to be able to
receive information much more quickly and efficiently, and respond
to new circumstances in a more adaptive way.”

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But on other measures, companies that were strict on office time
scored worse than more relaxed ones (see chart). Firms with five-
day mandates received lower marks from their employees for
supportiveness (whether workers feel their bosses care about them),
quality of leadership, toxicity (the extent to which disrespectful
behaviour is tolerated in the workplace), candour and work-life
balance. On the remaining three measures tracked by CultureX, the
scores were not meaningfully different based on location policies.

The analysis has its limitations. For example, it could be the case
that firms which care less about supporting employees or rooting out
toxic behaviour are less inclined to heed workers’ pleas for more
flexibility. Even so, the results are suggestive. “Companies that really
score highly on agility—Nvidia, SpaceX, Tesla—tend to strike a deal
with their employees,” says Don Sull (who is also a professor at the
MIT Sloan School of Management). Employees are offered generous
pay, great career opportunities and other perks. “But the trade-off is
the work-life balance tends to be really bad.”

More than five years after the pandemic began, companies are still
trying to find the right mix of in-person and remote work. As labour
markets cool, shifting power from employees to employers, bosses
may be tempted to demand more office time, claiming that it will
help corporate culture. For firms that prize agility, this makes
sense. But the data suggest it comes at a cost. ■

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Deconstructed

America’s broken
construction industry is a big
problem for Trump
It is beset by fragmentation, overregulation and underinvestment
7月 10, 2025 07:13 上午

Not lifting a finger

THE EMPIRE STATE BUILDING, finished in 1931, was erected in just

410 days. That same year construction began on the Hoover Dam. It
was meant to take seven years, but was built in five. Such feats now
seem hard to imagine. Last year half of America’s construction firms
reported that commercial projects they were working on had been
delayed or abandoned. In 2008 Californian voters approved a high-

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speed-rail line connecting Los Angeles to San Francisco, to be
finished by 2020. It will be at least a decade late.

America’s inability to build is a problem for Donald Trump. Although

he has again delayed levying “reciprocal” tariffs until August 1st, the
president’s commitment to reviving American manufacturing through
protectionism is as strong as ever. But can the country build the
factories, warehouses and bridges needed to reindustrialise, and do
so quickly enough? And if the administration is to achieve its
ambition to win the artificial-intelligence race, it will have to ramp up
the construction of data centres and electrical infrastructure, too.

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Demand for projects is certainly soaring. Turner Construction
Company, America’s largest commercial builder, reported that its
order backlog rose by a fifth, year on year, in the first quarter of
2025. Yet delays and cost overruns remain inevitable. Productivity
has gone from bad to worse. Since 2000, output per worker in the
construction industry has fallen by 8%, even as it has risen by 54%
for the private sector as a whole (see chart). The trouble is not
limited to commercial projects. America’s housebuilding companies
constructed the same number of dwellings per employee as they did

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nine decades ago, contributing to widespread shortages and soaring
prices. Behind this dismal state of affairs is a combination of
fragmentation, overregulation and underinvestment.

Start with fragmentation. By one count, there are around 750,000

companies operating in America’s construction industry, roughly
three times as many as in manufacturing, which accounts for twice
the share of GDP. The result is forgone economies of scale.
According to a study by Leonardo D’Amico of Harvard University and
co-authors, construction firms with more than 500 employees are
around twice as productive as those with between 100 and 499, and
four times as productive as those with fewer than 20 workers.

The industry is also characterised by a lack of vertical integration.

Giants such as Turner or Bechtel will take on responsibility for big
commercial projects but contract out much of the building work to
smaller local firms, some of which also sub-contract parts of the job.
Housebuilding follows a similar model. That leads to layers of co-
ordination, negotiation and payment, all of which can slow down
projects. The business of distributing building products is
fragmented, too, with inadequate inventories adding to delays.

Why, then, has the industry not consolidated? Part of the answer lies
in the thicket of building regulations that has grown steadily denser
since the 1970s. These have not only gummed up projects, they
have also made it essential for firms to develop detailed knowledge
of building codes, which vary from state to state and even across
towns. Often the easiest path for national giants has been to enlist
local contractors to help complete projects. Such contractors may
also be better placed to recruit workers, another challenge in an
industry long beset by labour shortages.

This has, in turn, contributed to endemic underinvestment. The

legions of sub-scale contractors, which typically operate with razor-
thin profit margins, lack the wherewithal to invest in labour-saving
technologies, particularly in an industry with such volatile demand.

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According to Jan Mischke of McKinsey, a consultancy, capital
expenditure by the average American construction firm comes to
about 3% of revenue, compared with 13% across other industries.

The adoption of new technologies has been lacklustre as a result.

The patchy uptake of software tools to plan and manage jobs does
not bode well for the industry’s embrace of artificial intelligence.
Builders have also been slow to make use of the robots that are
increasingly found in factories. There are only six of these for every
100,000 workers in America’s construction industry, according to
ING, a bank, compared with almost 3,000 in manufacturing (which is
still far below its potential). Of course, the variation in building
projects means they cannot be automated in the way factory
production can. Even so, robots are able to perform plenty of the
tasks, such as laying bricks, welding or moving materials, that take
up a significant share of construction workers’ time.

What could pull the industry out of its rut? Mr Trump has promised
to hack away at federal rules that stymie construction. On July 1st
the Occupational Safety and Health Administration proposed easing
rules on things such as the required amount of illumination on
building sites, which should help. Yet the president also wants to
deport workers who entered America illegally, which would worsen
labour shortages, and has slapped tariffs on materials such as steel,
which will make projects more expensive.

There are some signs that the industry is starting to consolidate,

spurred on at last, perhaps, by meagre profits. Deloitte, another
consultancy, notes that there has been an uptick in dealmaking of
late. In January Flatiron and Dragados, two big builders, finalised a
tie-up. Private-equity firms have been busily buying up and merging
smaller specialty contractors.

There has been consolidation in the supply chain, too. In April QXO,
a distributor, acquired Beacon Roofing Supply, another builders’
merchant, for $11bn. It now holds a fifth of the market for roofing

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materials in America. Last month QXO’s bid to acquire GMS, another
stockist, was pipped by a $5.5bn offer from Home Depot, a DIY
chain that has expanded into supplying contractors. Brad Jacobs,
QXO’s boss, argues that digitising the supply chain and improving
the flow of materials to builders, as he hopes to do, would help
productivity. “There’s a real crisis here,” he says. Digging the
construction industry out of its hole will be the mother of all
projects. ■

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Muted, then blocked

Linda Yaccarino goes from X

CEO to ex-CEO
The top position at Elon Musk’s social-media platform is open once
again
7月 10, 2025 07:12 上午

WHEN A COMPANY accidentally lavishes praise on Adolf Hitler, it

may not be surprising that its chief executive promptly decides to
step down. Yet in a testament to the turbulence of Linda Yaccarino’s
two years at the helm of X, once known as Twitter, this was only one
possible reason for her resignation on July 9th.

The Nazi mishap had come to light the previous day, when users
reported that X’s in-house chatbot, Grok, had declared that the best

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person to address anti-white hatred would be “Adolf Hitler, no
question. He’d spot the pattern and handle it decisively, every damn
time.” In another post, Grok wrote that “If calling out radicals
cheering dead kids makes me ‘literally Hitler,’ then pass the
mustache.” The bot’s human handlers acknowledged “inappropriate”
posts and deleted them.

But the far-right chatbot was only the latest of Ms Yaccarino’s

problems. A former advertising executive at NBCUniversal, she was

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hired as X’s chief executive in 2023 to turn around the company’s
faltering ad business. Five months later she found herself looking on
as the platform’s owner, Elon Musk, told its biggest advertisers to
“go fuck yourself”. The company’s ad revenue fell by more than half
that year (see chart).

Rather than wooing clients, Ms Yaccarino ended up suing them, as X

filed a lawsuit against an ad-industry group that it claimed had
organised a boycott of X (the group denied this but shut down, citing
the drain on its finances). Earlier this year X reportedly hinted to
Omnicom and Interpublic, a pair of big advertising companies, that
their proposed merger might be scuppered by Mr Musk’s friends in
the White House unless they bought more ads on X.

Working for Mr Musk did not appear easy. His bomb-throwing posts
on X, where he remains the most-followed user, create crises at all
hours of the day or night, including an explosive bust-up last month
with his former ally, President Donald Trump. Mr Musk appears to
have never fully given up the day-to-day running of his favourite
social network. Last year he tweeted out of the blue that X would
move its headquarters to Texas.

Ms Yaccarino can claim some successes. Ad revenue is at last on

track to grow again this year, even if it remains well below its pre-
Musk level. And although X’s audience continues to decline by a
couple of percent each year, it has not collapsed as many predicted.
Threads, a copycat app made by Meta, seems to be chasing a
different audience. The ambition for X to become an “everything
app” remains unclear and unrealised, but in January it announced a
partnership with Visa to create a digital wallet, to launch later this
year.

On Ms Yaccarino’s watch X has also made good on its promise to

remove restrictions on speech. Users receive a feed that is less
filtered—albeit, to some, less palatable—than in the Twitter days.
Other social-media apps have followed suit. In January Meta

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announced that it would stop fact-checking on its platforms, in
favour of a volunteer-based system championed by X. On Mr Musk’s
platform, posts go viral that a few years ago would have been
deleted, and a broader range of views are aired. This week, though,
that range turned out to be a little too wide. ■

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Low spirits

Pity France’s cognac-makers

They have won a respite from China, but face growing pressures in
America
7月 10, 2025 07:13 上午

COGNAC PRODUCERS had at least one thing to toast this week.

After a months-long dumping investigation into European brandy,
the Chinese government announced that 34 producers—including
the three biggest, LVMH, Pernod Ricard and Remy Cointreau—had
agreed to minimum prices, and so would be exempt from new
duties. A 35% tariff for the next five years will apply only to a
dribble of producers.

Cognac, Europe’s premier brandy appellation, is important to France.

“Cognac is very symbolic,” says Guilhem Grosperrin, whose family

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business, Cognac Grosperrin, sells high-end bottles. It is also
lucrative. Cognac producers make around €3bn ($3.5bn) in sales a
year. The industry is far more reliant on overseas markets than other
French products, such as wine or cheese; fully 97% of cognac is
sipped abroad. Bureau National Interprofessionnel du Cognac
(BNIC), the industry body, counts some 4,360 winegrowers and
distillers in the region, which is around a 90-minute drive from
Bordeaux.

Lately, however, cognac producers have found themselves in low

spirits. China has been one source of trouble. Its government’s
investigation into European brandy was widely seen as retaliation for
an EU probe into Chinese electric vehicles. Between October, when
China applied provisional anti-dumping tariffs, and May, cognac
shipments to the country fell by 38% compared with the same
period a year earlier, according to BNIC. As the organisation’s head,
Florent Morillon, put it, the industry has been a “hostage” in the
trade dispute.

Cognac’s China troubles are not over yet. Producers are still to reveal
exactly what minimum prices they have agreed on. These will
squeeze profit margins. China has also recently raised the import tax
on brandy and whisky from 5% to 10%. Analysts at Bernstein, a
broker, reckon that Pernod Ricard will still take a hit from these
measures of around €50m a year. That is better than the €140m
they estimate it would have cost had anti-dumping tariffs been
applied. But it is still equivalent to about 3% of the firm’s net profit
in its most recent financial year. It hasn’t helped that, amid an
economic slowdown, China’s rich are spending less on all sorts of
luxury items, from handbags to high-end booze.

Then there is America, the biggest market of all for cognac. There,
too, the drink is caught up in a trade spat. EU negotiators are
thrashing out a deal that will allow America to slap higher tariffs on
some goods from the bloc in return for sparing others. Cognac-
makers are hoping to come out unscathed. But President Donald

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Trump, who is eager to protect American whisky producers, may not
acquiesce. Earlier this year he threatened to introduce tariffs as high
as 200% on wine and spirits from the EU.

An even greater worry for cognac producers is what is happening

with demand for their tipple in America. Data from Nielsen, an
analytics firm, and Citigroup, a bank, suggests sales of cognac in the
country dropped almost 12%, year on year, in the four weeks to
mid-June.

The slump partly reflects the general strain on consumers’ wallets.

But it is also the result of longer-term trends. Youngsters are
boozing less than their parents and grandparents. The share of
Americans aged between 18 and 34 who say they think drinking
even in moderation is bad for health reached 65% last year, up from
34% in 2018, according to Gallup, a pollster. And when they do treat
themselves to a tipple, it is increasingly unlikely to be cognac.
Whereas in the 1990s rappers including 2Pac and Master P name-
dropped Hennessy in their lyrics, more recent hits by Nicki Minaj and
Drake have been peppered with mentions of Casamigos and other
tequila brands. For cognac houses, it’s a sad song. ■

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Bartleby

On Lego, love and friendship

Human relations are a useful way to think about brands
7月 10, 2025 07:13 上午

THERE IS A locked room in Lego’s corporate museum, in Billund in

Denmark, which is called the Vault. It is a large space, filled with
shelves that are arranged in chronological order, starting in 1958 and
stretching towards the present day. Between them, the shelves
contain around 10,000 sets of Lego.

The Vault is used by the toymaker’s designers as a source of

inspiration, but its effect on first-time visitors is what makes the
room remarkable. It’s impossible not to seek out sets from your own
childhood, not to be drawn back to an earlier version of yourself

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and, for lots of people, not to well up. We thought about having
Kleenex as a sponsor, says Signe Wiese, an in-house historian.

Visiting Lego’s vault is a chance to experience the emotional power

of a much-loved brand (you can hear more in this week’s final
episode of our Boss Class podcast). Marketing experts have a whole
taxonomy to describe the ties that bind consumers and brands. In a
recent review of the literature, Claudio Alvarez, Meredith David and
Morris George of Baylor University identify five types of connection
that have been the subject of concerted study.

The feeling that every marketing manager dreams of eliciting is

“brand love”. This goes well beyond a belief in the quality of a firm’s
products to include things like emotional attachment, feelings of
passion, frequent use, a strong sense of identification with a brand
and more. It’s not quite doodling a business’s name and yours with a
love-heart, but it’s not far off.

The flipside of brand love is “brand hate”, a reaction that might

reflect bad experiences with a product, a strong dislike of a brand’s
values or simply a rivalry with a loved brand. A diverting piece of
research by Remi Trudel of Boston University and his co-authors
looks at how consumers choose to dispose of products, and finds
that people who strongly identify as Coca-Cola drinkers are more
likely to recycle a Coke can and throw a Pepsi one in the rubbish;
the reverse is true of Pepsi fans.

The three other types of consumer-brand connection identified by Mr

Alvarez and his co-authors are “communal relationships”, in which
people feel a sense of obligation or concern for a brand (local stores
can often fit into this category); “brand addiction”, often
characterised by uncontrollable urges to buy a firm’s products and
services; and “brand friendships”, to denote positive feelings that fall
somewhere short of love.

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These are the five types identified in the literature review, but the
analogies between humans’ relations with each other and with
brands can be extended in all sorts of directions. Researchers use
the term “brand flings” to describe shorter-lived, intense interactions
with brands, often in zeitgeisty industries such as fashion. “Brand
flirting” involves a little dabbling with a competitor of your preferred
brand; it can redouble your liking for the original. Friendships have
subcategories, too: best friends, casual friendships and so on.

Some of this taxonomy can feel a bit forced. You’re going shopping,
not joining an orgy. Brands cannot reciprocate feelings. But the idea
of gradations of attachment rings true; how people feel about a
brand determines their behaviour. Vivek Astvansh of McGill University
and his co-authors found that people are more likely to report safety
incidents when they believe a brand is well-intentioned than when
they do not. The reason? They want to provide feedback that can
help it to solve the problem.

Lego elicits a depth of emotion that feels like brand love. But Mr
Alvarez wouldn’t put it in that category, because most adults do not
continue to have frequent interactions with the products. It’s more
like a childhood friend, he says, one that depends on the trigger of
nostalgia to cause a wave of warm feelings.

Such distinctions are not just academic. Lego’s bosses, for example,
make no bones about the fact that they have a limited window early
in a child’s life to form a bond that can cause them to shed tears in a
room in Billund decades later. If managers know what kind of
connection a brand is likely to have with its customers, the bricks of
a marketing strategy will fall into place. ■

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which brings together the best of our leaders, columns, guest essays
and reader correspondence.
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Schumpeter

A CEO’s summer guide to

protecting profits
America’s bosses are sharpening their axes
7月 10, 2025 07:13 上午

MID-JULY is the time to bare it all. On the beach, this involves

swimwear that, au fait with the latest fashion, varies in skimpiness
from extreme to disturbing. In the boardroom, it consists of a ritual
of corporate exhibitionism known as the summer earnings season.
Results from the second three months of the year will trickle out
over the next few weeks. Back in April it looked on course to be a
distinctly awful quarter. President Donald Trump had just launched
his trade war, sending stockmarkets down and bond yields up.
Bottom lines were imperilled by rising costs and slowing economic

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growth. Think walking around in tiny Speedos makes you feel
naked? Try fielding analysts’ questions about plunging profits on an
earnings call.

In the event, bosses have had little to feel bashful about. Mr Trump
chickened out in the face of market forces and promptly paused
most of his tariffs for 90 days. Bond vigilantes retreated. The S&P
500 index of American big business has recouped all its losses and
then some. Yes, the average forecast for its constituents’ second-
quarter earnings growth has declined, from 9%, year on year, at the
end of March to 5%, according to FactSet, a data provider.
Nonetheless, many bosses will be able to parade record profits over
the coming weeks.

Even so, they may experience some residual discomfort when asked
about what comes next. Pressure on profits is building. Although Mr
Trump has extended the tariff pause until August 1st, he has told
Uncle Sam’s trading partners to brace for more levies. On July 8th
the price of copper futures in America jumped by 13% after the
president threatened a 50% tariff on the red metal. Days earlier he
had signed into law a budget bill that will add perhaps $4.5trn to
public debt, which may raise borrowing costs for everyone eventually
(and pronto if bond traders stir).

Companies have little control over the cost of imports and of debt.
They can, however, contain that of labour. In an effort to reassure
investors, many have been telegraphing just such containment
lately. On July 2nd Microsoft said that it would lay off 9,000 workers,
or about 4% of the software giant’s total, on top of the 6,000 let go
in May. That month Walmart told employees to prepare for 1,500 job
cuts. In June BlackRock, Citigroup, Disney and Procter & Gamble all
carried out “simplification”, “strategic realignment” or other
euphemisms for sackings.

So far this year American companies have signalled a total of

439,000 redundancies, according to Challenger, Gray & Christmas,

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an outplacement firm. In the same period last year the figure was
below 400,000. On July 2nd a closely watched jobs report from ADP,
an HR firm, revealed that American businesses shed a net 33,000
workers in June. Official figures released the following day painted a
rosier picture, but chiefly thanks to growth in public-sector and
health-care payrolls.

Corporate employees should brace for more terminations. If

innovation is America Inc’s mightiest superpower, ruthlessness in
keeping its workforce lean comes a close second, especially next to
the cuddlier capitalisms found in places like Europe or Japan.

On first glance, corporate America does not immediately look more

pink-slip-happy than businesses in other rich economies. Three-
quarters of S&P 500 firms saw their workforces shrink in at least one
year over the past decade, identical to the share of Europe’s STOXX
600 index that reported such a decline. The index-wide workforce
fell in nine of the past 24 years in Europe and seven times in
America. One in four large European companies has a smaller
workforce today than it did ten years ago, compared with just one in
five American counterparts.

The big difference, of course, is that American businesses have been

trimming nearly as much fat as European ones while growing much
more robustly. Between 2014 and 2024 aggregate revenues for the
S&P 500 increased by just over a fifth, after adjusting for inflation.
For the STOXX 600 they contracted by the same amount. Sales
outpaced employment at more than half of the American blue-chip
companies. At 27 of them turnover rose even as the workforce
diminished. By comparison, revenues grew more slowly than payrolls
at two-thirds of large listed European firms.

The tendency to prune workforces whenever the opportunity arises

is especially pronounced in America’s most go-getting sector. Since
2016 combined annual sales dipped just once for the S&P 500’s
information-technology champions, whereas their total workforce

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was cut four times. Meta had 12,000 fewer techies at the end of last
year than at its peak of 86,000 in 2022. On average, they generated
$2.2m in revenue each in 2024, up from $1.4m three years ago. In
January Mark Zuckerberg, Meta’s boss, channelled his inner Jack
Welch by vowing to rank employees and yank the worst 5% of
performers as he transforms his social-media empire into an
artificial-intelligence (AI) powerhouse.

Computer says you’re fired

Advances in AI, and especially semi-autonomous AI agents, promise

to hand bosses an even bigger axe. Chief executives cannot wait. In
April Tobi Lütke informed his staff at Shopify, a maker of e-
commerce software, that before asking for more people or more
money, teams “must demonstrate why they cannot get what they
want done using AI”. Last month Andy Jassy told Amazon’s white-
collar employees that AI will reduce the tech titan’s total corporate
workforce in the next few years.

When the next downturn does hit America Inc, as sooner or later it
will, such pronouncements will multiply. Businesses can use
recessions, when lay-offs are more excusable, to adopt labour-saving
technologies. And even if AI does not save all that much labour, it
provides convenient cover for CEOs seeking to slim down their
workforces. Anything to avoid profitless nudity. ■

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Finance & economics

Trump’s trade deals try a creative way to
hobble China
Tariff-hopping mad :: To appease the world’s biggest market, countries must anger
the world’s biggest trader

How America’s economy is dodging disaster

President’s bump :: It is astonishingly dynamic, even under the weight of tariffs

Struggling with the trade war? Amateur

football might help
A foot like a traction engine :: Jiangsu’s party cadres find success with a bizarre idea

Japan has been hit by investing fever

At long last :: Will old folk catch the bug?

Don’t invest through the rearview mirror

Buttonwood :: Markets are supposed to look forward; plenty of investors look back
instead

Jane Street is chucked out of India. Other

firms should be nervous
Taking heat :: Around the world, marketmakers now face extra scrutiny

Want to be a good explorer? Study

economics
Free exchange :: The battle to reduce risk has shaped centuries of ventures

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Tariff-hopping mad

Trump’s trade deals try a

creative way to hobble China
To appease the world’s biggest market, countries must anger the
world’s biggest trader
7月 10, 2025 07:13 上午

IN THE FIRST cold war between America and the Soviet Union, the
two superpowers fought each other by proxy. Something similar is
happening in America’s trade war with China. After conciliatory talks
in Geneva and London, the two sides are no longer bashing each
other with new tariffs. Instead, America is waging its war indirectly,
through unfortunate third countries.

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Its new deal with Vietnam and its fresh tariff threats issued to many
other countries seem designed to reduce China’s role in their supply
chain. Countries that had hoped to stay out of the new cold war now
fear they are being forced to pick a side. To appease the world’s
biggest market, they must anger the world’s biggest trader.

On July 7th Donald Trump, America’s president, sent letters to

Japan, South Korea and a dozen other trading partners pushing back
the deadline for their trade talks from July 9th to August 1st, and
tweaking the tariffs they will face if talks fail. Japan and South
Korea, for example, will incur duties of 25%. Cambodia will be
clobbered with tariffs of 36%; Myanmar and Laos face 40%. The
letters also said that any goods “transshipped” from elsewhere
would face the higher levies they were seeking to avoid. Although
China was not named, no one was in any doubt about the elsewhere
Mr Trump had in mind.

More letters followed on subsequent days, including to Brazil and the

Philippines. Separately, the president threatened an extra 10% tariff
on countries aligned with the “anti-American policies” of the BRICS
group, established in 2009 by China alongside Brazil, Russia, India
and later South Africa. He has previously warned it not to try to
dethrone the dollar as the world’s dominant currency.

America’s deal with Vietnam will apparently slap 20% tariffs on most
of the Asian country’s goods. Ominously, it will also impose 40%
tariffs on “any transshipping”. The deal follows one struck with
Britain on May 8th. It promised to treat British aluminium, drugs and
steel favourably if Britain ensured the security of its supply chains to
America’s satisfaction. That is assumed to mean buying fewer inputs
from China and allowing American scrutiny of Chinese-owned
factories in the country.

Offering favours to one country if it imposes penalties on another is

“something new” in trade negotiations, note Achyuth Anil at the
University of Sussex and co-authors. The innovation has not escaped

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China’s attention. China firmly opposes any country making trade
deals at the expense of its interests, the Ministry of Commerce has
said. “China will not accept it and will take resolute counter-
measures.” Countries must “remain on the right side of history”.

China does not know precisely what it is up against. Mr Trump’s

team has not clarified what it means by transshipment. But it is
clearly concerned China will try to evade the tariffs it faces by
serving America’s market via other countries. During Mr Trump’s first

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trade war, China exported fewer products to America and more to
countries like Mexico and Vietnam, which then exported more goods
to America. A similar pattern recurred this year after Mr Trump’s
sweeping “reciprocal” tariffs in April. Although China’s exports to
America fell by over 34% in May, against a year earlier, its overall
exports continued to grow. Many countries that bought more from
China also sold more to America.

This is not itself proof of any tariff-hopping. Countries could be

buying and selling unrelated goods. Those enjoying bumper exports
to America might have bought other things from the world’s second-
biggest economy. Australia, for example, exported $133m more in
frozen beef to America in April and May than a year earlier. It also
bought $186m more in lorries from China. Australian companies
were not relabelling the trucks as beef.

Thus it pays to study the figures product by product. Cambodia sold

an extra $26m of sweaters to America in April and May, having
increased its sweater imports from China by over double that
amount. Thailand sold $42m more car parts to America, having
bought $114m more from China. We have added up all such extra
exports. The totals were nearly $2bn for Vietnam, followed by
Thailand ($1.8bn), India ($1.6bn) and Taiwan ($1.1bn).

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Some of these flows may represent legal “trade diversion”, says Leah
Fahy of Capital Economics, a consultancy. High tariffs could have
priced Chinese firms out of the American market. Rivals in Thailand
and Vietnam could have rushed to take their place, leaving a gap in
these countries’ home market, which Chinese firms filled. In such a
scenario, the goods arriving from China would not be the same ones
leaving for America. They would just belong to the same statistical

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category. Nevertheless, it seems unlikely this kind of diversion
explains all the extra exports.

The Trump administration is probably also worried about imports

from Thailand, Vietnam and elsewhere that include parts, materials
or components from China. Under existing rules, these goods are not
considered Chinese so long as they have been “substantially
transformed” elsewhere. What counts as a substantial
transformation varies from product to product. Chinese flour is
transformed when baked into a cake. The same is true of fabric cut
and stitched into a shirt. Assembling Chinese parts counts if the
assembly is “meaningful and complex”. In one case, America’s
border authorities decided that a piece of exercise equipment had
been substantially transformed from its Chinese parts, because the
parts had to be welded, degreased, sprayed with clear coat and
assembled in as many as 255 steps.

Mr Trump may abandon this qualitative standard for a quantitative

one. America’s trade agreements often require that a certain
percentage of a product’s value originates in a country before it can
be said to be “made” there. In this scenario, notes Ted Murphy of
Sidley Austin, a law firm, Vietnam would face tariffs of 40% on
goods that have been substantially transformed in the country, but
still contain too much Chinese content in American eyes.

If the new threshold is demanding, the results could be troubling for

Vietnam. Its manufacturers depend on China for parts and
components, a reliance that has increased sharply since Mr Trump’s
first trade war. China contributed 6% of the value of Vietnamese
exports serving the American market for manufactures in 2017,
according to Natixis, a bank. That figure had jumped to 16% by
2022.

Vietnamese officials must hope that Mr Trump has something

narrower in mind: what Caroline Freund at the University of
California, San Diego, calls “the China wash”. This refers to goods

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from China relabelled as “made in Vietnam”, even though they are
largely unchanged. Peter Navarro, one of Mr Trump’s advisers, has
complained that “China uses Vietnam to transship to evade the
tariffs…They slap a made-in-Vietnam label on it and they send it
here.” According to Mr Navarro, the China wash accounts for a third
of Vietnam’s exports to America. A better estimate by Ms Freund
suggests the share peaked at less than 8% in 2020, and has since
fallen.

Relabelling may annoy Mr Navarro, but it is also already illegal.

Anyone engaging in it risks penalties far worse than a 40% tariff.
Last year a Florida couple earned over four years in prison for
illegally importing Chinese plywood, sometimes reboxed in Malaysia
or Sri Lanka. They even had to pay the government for the cost of
storing the wood until the case was resolved. During its talks with
America, Vietnam vowed to crack down on such mischief. America is
doing the same. In May the justice department put “trade and
customs fraud, including tariff evasion” second on its list of priorities
for white-collar crime.

Of course, the best way to prevent misdeclarations is to remove the

incentive to do it. If America charged the same tariff no matter
where a product was from, why would exporters lie? Everyone would
face the lowest tariff charged on anyone else. Or, to put in another
way, every country would receive the same treatment offered to the
most favoured nation. It is a bold idea to fight waste, fraud and
abuse. Someone should suggest it to Mr Trump. ■

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and markets, sign up to Money Talks, our weekly subscriber-only
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President’s bump

How America’s economy is

dodging disaster
It is astonishingly dynamic, even under the weight of tariffs
7月 10, 2025 07:13 上午 | Washington, DC

Still burning

ECONOMIC DOOM beckoned after President Donald Trump

announced his “Liberation Day” tariffs on April 2nd. Stocks crashed;
forecasters predicted a recession within the year. Three months on,
the mood is more relaxed. Prices in shops are not noticeably higher,
unemployment is flat and the S&P 500 index of big American firms is
resurgent, back at all-time highs. Although Mr Trump has sent letters
threatening a whole host of countries with swingeing tariffs if they

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do not reach an agreement on trade with America by August 1st,
nobody is too worried.

What gives? Was the president right in thinking that tariffs were a
smart way to squeeze money from foreigners? Were the doom-
mongers overdoing it?

For the moment, businesses, households and financial markets are

locked in an elaborate game of wait-and-see. Companies stocked up

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heavily early in the year in anticipation of tariffs. Indeed, they did so
by enough to drag measured GDP growth into the red in the first
quarter, as a surge of imports distorted the numbers.

These stockpiles will be run down. In many cases, they have already
been depleted, meaning that businesses are turning once again to
imports. Last month customs duties were more than three times as
high as the average in recent years (see chart 1). Companies that
bring in goods from abroad now face an unpalatable choice: either
they can eat the tariffs and accept lower profits, or they can pass on
the additional costs to their customers.

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So far, they have mostly chosen the first option. Bosses are
attempting to wait out the president. Why alienate customers with
higher prices if Mr Trump may change his mind and render the
exercise pointless? Even in the latest consumer-price data, which still
shows inflation a little above the Federal Reserve’s target of 2%, it is
difficult to spot a tariff impact.

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In fact, doing so requires something of an economic microscope.
Zooming in on the prices of affected categories at a handful of large
retailers, Alberto Cavallo of Harvard Business School and co-authors
do discern some slight price rises in both imported goods and their
domestically produced competitors (see chart 2). However, such
prices have risen by only a percent or two—a far smaller increase
than that seen in tariffs. America’s effective tariff rate was at 10% in
June, its highest in eight decades. Mr Trump’s threats, as are due to
come into effect on August 1st, would mean a significant step up.

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Oddly, though, tariffs may be pushing down prices via another
mechanism—by taking a toll on the economy. The Liberation Day
drama crushed consumer confidence, possibly softening demand.
Until recently, this has been evident only in “soft” data (surveys and
the like). Now signs of it are starting to appear in “hard” data, too. A
recent release showed that household spending fell month-on-month
in May. Employment figures for June were strong, but bolstered by

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government hiring, especially of teachers. Those for the private
sector were lower than expected.

A running estimate of GDP, produced by the Fed’s Atlanta branch,

suggests that its core components (private investment and
consumption) have fallen from an annualised growth rate of 2-3% at
the start of the second quarter to 1% now (see chart 3). Goldman
Sachs, a bank, has compared the latest data to previous “event
driven” shocks that led to recessions, and found that today’s
slowdown is roughly in line with the historical norm.

Brexit redux

Whether this is the start of something more serious depends, in

large part, on quite how punchy the president feels on August 1st.
Without another deadline extension or similar, a further slowdown
seems likely. Moreover, as Britain discovered after leaving the
European Union—the most recent case of a rich country imposing
large trade barriers on itself—elevated uncertainty can by itself be
sufficient to suppress business investment for quite some time. And
America is now an extremely uncertain country (see chart 4).

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All the same, a more significant slowdown does not necessarily
mean a recession. Tariffs are colliding with an American economy
that is, by any historical or international standard, extraordinarily
dynamic. It has been growing at a consistent 2-3% a year since
2022. As a consequence, America is one of the few rich countries
that might be able to shoulder even a sizeable hit to its growth
without falling into recession. The additional stimulus in Mr Trump’s
“Big, Beautiful Bill” is also front-loaded, meaning that it will provide a
boost this year and next, which could help obscure the impact of

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tariffs (even if it also creates an inflationary mess for the Fed to
handle). All this suggests a future in which economists endlessly
debate the actual impact of the tariffs, while the American public
barely notices them, despite having been left poorer. Not a triumph
for Mr Trump—but not a disaster either. ■

Editor’s note (July 7th 2025): This story has been updated.

For more expert analysis of the biggest stories in economics, finance

and markets, sign up to Money Talks, our weekly subscriber-only
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A foot like a traction engine

Struggling with the trade

war? Amateur football might
help
Jiangsu’s party cadres find success with a bizarre idea
7月 10, 2025 07:12 上午 | Suzhou

SUZHOU IS ONE of China’s most important electronics

manufacturing centres. But who cares about that? On June 29th
nothing was more important to the city than its team beating nearby
Yangzhou in a football match. The fierce rivalry stretches back more
than 1,000 years to when the cities competed for pre-eminence
along the Grand Canal. For centuries they also sought to outdo each
other’s sublime gardens. Suzhou, the larger and richer of the two,

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was victorious during the Song dynasty. It continued its winning
streak in 2025, comfortably beating Yangzhou 3-0.

Since the local football league was launched in May, China has been
engrossed by matches in Jiangsu province, an eastern coastal
region. Stadiums of 40,000 seats regularly sell out. Attendance is
sometimes double the average for China’s professional Super
League. Touts resell tickets for 60 times the original price. At the
match in Suzhou, hundreds of people, including your correspondent,
had to watch a live stream outside the stadium because they could
not obtain a ticket.

As one of China’s leading manufacturing provinces, Jiangsu’s cities

are richer than most. Suzhou has a bigger economy than the Czech
Republic; Wuxi, a nearby conurbation, boasts a GDP per person
higher than Portugal’s. But the region is also one of the first places
to feel the pain from China’s trade war with America. Some 9% of
China’s exports to America came from Suzhou alone last year, most
in the form of electronics and machinery. Youth unemployment was
said to be particularly high in Kunshan, the area of Suzhou that
hosted the match on June 29th, even before the trade war got
going.

So thank God for football. Officials came up with the idea of a league
earlier this year, and have done all they can to promote it. The
results look good. Tens of thousands of football fans have been
showing up in Jiangsu. Airlines and hotel bookings are up
considerably from last year, as are visits to local tourist sites and
restaurants. Beer sales on one delivery platform have risen by 90%
month on month in Jiangsu since the league launched.

The tournament’s success may seem hard to fathom, but it is part of

a pattern. China has been struck by a number of budget travel fads
that send swarms of young tourists, living on the cheap, to
otherwise quiet cities. Examples have included a sudden yen for the
kebabs of a chemicals hub and for an oily soup found in a remote

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north-western city. The trend then usually dies off within a few
months.

Will Jiangsu’s amateur footballers also lose appeal? A few factors

make the league especially marketable. The most important is
heated inter-city rivalries (and horticultural feuds). Locals joke that
Jiangsu province does not exist. Instead, it is a collection of cities
with little in common and plenty of ill-feeling. For example, Nanjing,
the provincial capital, is mocked by other cities because its local
culture, cuisine and dialect have more in common with neighbouring
Anhui province. These types of rivalries are usually played down by
officials, who want to project a sense of unity. This time, though,
Jiangsu’s cadres have fanned the flames, helping the tensions go
viral.

Raise a glass

Loose sponsorship rules have also played a part. The Chinese

Football Association mandates that sponsors of professional leagues
must be legitimate brands with “positive social images”. Jiangsu has
skirted these rules. Heineken, a Dutch brewer, is a sponsor; so, too,
are local barbecue stalls. This gives the league a more authentic
feel, especially compared with China’s professional league, which has
been hit by corruption scandals. Fans in Suzhou say the league is
“pure”, meaning they will overlook the amateurish talent.

Henan in central China has kicked off a rival league; Guangdong and
Sichuan have plans for their own. All the same, Jiangsu’s wealth and
first-mover advantage put it in a strong position. The province has
good infrastructure and world-class stadiums in all 13 competing
cities. Suzhou may have won the match on June 29th, but the whole
region is benefiting. ■

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and markets, sign up to Money Talks, our weekly subscriber-only
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At long last

Japan has been hit by

investing fever
Will old folk catch the bug?
7月 10, 2025 07:13 上午 | Tokyo

IT IS NOT difficult to spot the change. Bookshops now dedicate

entire sections to financial guides. Trains are plastered with
advertisements for investing seminars. Financial influencers
command enormous online audiences with tutorials on how to build
a portfolio or open a brokerage account. As Ponchiyo, a 31-year-old
YouTuber with almost 500,000 subscribers, puts it: “People are
realising it is wasteful to leave money sitting in savings.”

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At the end of 2023, cash and bank deposits of ¥1,128trn ($7.6trn)
counted for over half of Japanese household assets, compared with
less than a third in Britain and an eighth in America. Then, in
January 2024, the government overhauled its NISA scheme, a tax-
free investing option modelled on Britain’s ISAs. The scheme has
proved much more successful than ministers anticipated. Investors
have opened 5m new accounts. And earlier this year, assets in NISAs
reached ¥59trn, having hit the government’s target three years
ahead of schedule. Japan is at a “turning point”, as Kishida Fumio, a
former prime minister, put it at a recent conference. The shift is “a
test of whether it can leave behind its deflationary past and embrace
growth”.

After Japan’s asset-price bubble burst in the early 1990s, years of

deflation and stagnation left savers wary of risk. Today, though,
economic developments are creating additional incentives to invest.
Japan’s core inflation has reached 3.7%, the highest in the G7,
which erodes the value of idle cash, especially given the country’s
relatively low interest rates. Meanwhile, Japan’s fast-ageing
population has raised concerns about the durability of the pension
system. “Investing used to be seen as something for people chasing
big returns,” says Suzuki Mariko, who runs Kinyu Joshi (“Finance
Girls”), a group for young women. “Now many people feel they have
no choice but to consider it, even just to protect what they already
have.”

The boom has also coincided with progress in Japan Inc. Tokyo’s
stock exchange has accelerated its corporate-governance reforms as
part of a broader official effort. In 2023 it instructed listed
companies to “implement management that is conscious of cost of
capital and stock price”. Many have responded by buying back
shares, raising dividends and focusing on profitable activities;
indeed, dividend payouts and share buy-backs have both reached
record highs. Cross-shareholdings—used to cement corporate
alliances and insulate management, often at the expense of minority

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shareholders—have fallen from more than 50% of publicly listed
shares in the early 1990s to just 12%.

Next up: old people. Those aged 60 and over hold nearly 60% of
Japan’s household assets. The government is considering a new
scheme called “Platinum NISA”, which would allow those over 65 to
invest tax-free in monthly dividend funds, currently excluded from
NISAs, making it easier for pensioners to draw down assets. “Many
seniors used to think NISA was just for young people to build their
assets over a long period,” says Shiraishi Hayate of SBI Money Plaza,
which runs investment seminars for retirees. “Now they are realising
it can work for them.”

Not everyone is happy, however. As in Britain, critics, including local

asset managers and commentators, complain that much of the
money invested through NISAs is going abroad. Estimates suggest
that around half of total investments go into foreign stocks, as do as
many as 80-90% of those made through mutual funds. The default
purchase for beginners is either America’s S&P 500 index or the
Orukan, shorthand for “All Country”, a tracker of global stocks. As
annoying as this may be for policymakers, neophyte Japanese
investors are demonstrating wisdom beyond their years: it is never
wise to be too exposed to your home market. ■

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Buttonwood

Don’t invest through the

rearview mirror
Markets are supposed to look forward; plenty of investors look back
instead
7月 10, 2025 07:13 上午

IN A MORE predictable world, stocks would be easy to price. A share

gives its owner claim to a series of cash flows, such as dividends and
earnings. Investors would forecast the future value of each, then
discount it to a present value based on prevailing interest rates, the
riskiness of the cash flow and their own risk appetite. Add them all
up, and that would be the stock’s price.

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In the actual, radically uncertain world, things are rather more
difficult. Few equity analysts, for example, even attempt to forecast
earnings more than a few years into the future. But the “discounted
cash flow” model is still useful. Divide stock prices by current
earnings, and you get an indication of the discount rate the market
applies to future cash flows. It turns out that this discount rate has
historically been a reasonable, if imperfect, guide to the
stockmarket’s long-run returns. A low discount rate (or, equivalently,
a high price-to-earnings ratio) forecasts low returns, and vice versa.
That is valuable information for investors considering, say, how much
to save for retirement, or to allocate to stocks compared with other
assets.

It might be surprising that such readily available measures help

predict the future. The bigger surprise is that so many investors
ignore them altogether. Similar forward-looking measures of
expected returns are widely employed by academics and big
institutional investors; indeed, they underpin many investment firms’
long-term forecasts of capital markets. Yet when it comes to
individual investors, this reasoning is often turned on its head.
Instead of looking forward, surveys consistently show that, as a
group, they look back, expecting returns that are extrapolated from
those in the past.

Think of it as investing through the rearview mirror. Such an

approach says that if stock prices have soared recently, they will
continue to do so. Admittedly, for most of the time since 2009, this
has been a better prediction than the supposedly forward-looking
ones. American share prices climbed for most of the 2010s, and
price-to-earnings ratios with them, but the bull market just kept
going. Trimming your stock allocation as valuations rose and the
academics’ expected returns fell would only have cut your profits.
Even after the bear market of 2022, prices began marching up again
despite above-average valuations, and then rocketed. No wonder
that, this year, retail investors are eager to buy shares whenever the
market dips.

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It is not just amateurs who look back rather than ahead. Stock
analysts have strong incentives to accurately forecast the earnings
growth of the companies they cover. They nevertheless tend to do
so by extrapolating from past years, despite the fact that the true
correlation between historical and future growth is negative. Theory
suggests that the prices of options, a form of derivative contract,
should depend on the volatility traders expect in the future. In
practice, the volatility implied by foreign-exchange options often
tracks the size of past jumps. Analysts at Goldman Sachs, a bank,
find that over the past year this has led traders of foreign-exchange
options to consistently underestimate future volatility. They have
been wrongfooted by changing economic conditions and geopolitical
uncertainty.

That points to the real problem with rearview-mirror investing: it is

all very well until something smacks into the windscreen. Betting on
a surging bull market continuing looked clever in the late 1990s,
before the dotcom bubble burst, and again in 2021, before the
following year’s crash. Both times, forward-looking measures would
have noted exceptionally high valuations, forecast low returns and
rightly cautioned against outsize investments in stocks. As animal
spirits roared, such pessimism would have struck many investors as
the very worst kind of downer—right up until the plunge began.

The rearview-mirror mindset, writes Antti Ilmanen of AQR Capital

Management, a hedge fund, is most pronounced when such
investors have recently “got it right”. It is most misleading when
their success has come from rising valuations, since this is a trend
that can readily go into reverse. And it is most dangerous when “the
times they are a-changing”. For American stocks in particular, all
three conditions are in place today. Those who have spent recent
years investing through the rearview mirror have scored a victory
over the ivory tower and some of the world’s grandest financial
institutions. But it is probably time to start inspecting the road
ahead.■

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Taking heat

Jane Street is chucked out of

India. Other firms should be
nervous
Around the world, marketmakers now face extra scrutiny
7月 10, 2025 07:13 上午 | New York

INDIAN REGULATORS speak with a little more flamboyance than

their peers. On July 4th the Securities and Exchange Board of India
(SEBI) accused Jane Street, a trading firm, of perpetrating a “sinister
scheme” of manipulation in the country’s manic options market. In a
lengthy document, it concluded that “the integrity of the market, and
the faith of millions of small investors and traders, can no longer be
held hostage to the machinations of such an untrustworthy actor.”

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SEBI has banned the firm from India’s securities markets. The drama
has thrown a bright light on Jane Street, a company of legendary
opacity even in an industry that prioritises secrecy. And it could carry
political and regulatory consequences, not just for Jane Street, but
for an entire, ascendant industry of marketmakers.

Although Jane Street was set up 26 years ago, it first made waves
when its earnings exploded in 2020, hitting $8.4bn in the first half of
the year. A willingness to take risks when opportunities present
themselves has fuelled its growth. Jane Street reportedly made
$21bn in revenue last year, with fewer than 4,000 employees.
Citigroup, a giant bank, made $20bn in its markets business, with
9,000 employees.

The company has a nerdy culture. (To see quite how nerdy, attempt
the puzzles it occasionally posts on its website.) Beyond that, it is
mysterious. Even its management structure is unclear: Jane Street is
run by a series of committees on behalf of its partners, and has no
chief executive. Staff once asked interns coming to the end of their
time at the firm to guess who the equity holders were. They had
mixed success.

What is clear is that Jane Street made hay in India. During the
covid-19 pandemic Indian retail investors, many with little
experience, soared in number as online-trading platforms took off.
Options trades could be leveraged aggressively; influencers on social
media touted vast returns. By mid-2023 stock derivatives had trading
volumes 422 times larger than those of the underlying cash market.
America’s ratio was nine to one. In early 2024, by one estimate,
84% of all global derivatives trading was occurring in India, meaning
arbitrage opportunities abounded.

The scale of the options market is core to SEBI’s allegations of

misconduct. Its officials say that Jane Street was trading
aggressively in the stockmarket, particularly the BANKNIFTY index of
bank shares, to move much larger positions in the options market. It

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argues that Jane Street made losses on the trading of less liquid
underlying stocks and futures, but that they were more than offset
by enormous profits in the options market—a red flag for market
manipulation. Sometimes, SEBI says, the firm’s trading moved prices
in its favour shortly before the market closed. The tactic is an old
one, known as “marking the close”, which is illegal in most markets.
Over 21 separate trading days, the regulator estimates that Jane
Street made 48bn rupees ($560m) with the strategies.

Nothing to see here

Jane Street rejects the allegations. In a note to staff, the company

said its trading on the days in question was bread-and-butter
arbitrage, bringing stock prices into line with those in the options
market. SEBI’s theories demonstrate “a misunderstanding of
standard hedging practices”, it argues. The firm also says it has
communicated repeatedly with SEBI, despite the regulator’s
suggestion it has been unco-operative. Jane Street is working on an
official response, which it has 21 days to make.

The firm’s unusual management model, lacking leaders to make its

case, is a poor fit for a high-stakes public argument. Jane Street now
runs the risk that a casual observer knows only two things about it:
that it is the subject of a financial scandal in India, and that it was
the training ground for Sam Bankman-Fried, an erstwhile crypto
billionaire now serving a 25-year prison sentence for a range of
financial crimes.

Other marketmakers will be paying close attention. Boston

Consulting Group, a consultancy, suggests that banks’ global
markets revenue has grown by just 3% a year since 2018, compared
with 22% a year for non-bank marketmakers such as Jane Street,
Citadel Securities, Susquehanna International Group and Virtu. The
upstarts now have a 26% share of the $331bn total, a record. They
have benefited as banks have retreated from marketmaking—an

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unintended result of tighter regulation after the global financial crisis
in 2007-09.

Financial scandals vary in their consequences. Goldman Sachs and

JPMorgan Chase took heavy fines for their respective involvements
in the 1MDB and London Whale blow-ups, but neither led to tighter
rules for the industry. On the other hand, the revelation that traders
at Barclays and other institutions had been fixing the London
Interbank Offered Rate, a reference rate used in the pricing of
hundreds of trillions of dollars of derivative contracts, resulted in a
complete overhaul.

Jane Street and its rivals borrow from a blend of bond markets,
private lenders and, somewhat ironically, the banks they are
displacing. All will suffer if tighter rules on risk-taking result from the
scandal. At the very least, watchdogs will want to make sure that
they truly understand what the trading firms are up to.

Some of Jane Street’s competitors are looking on with barely

disguised glee. “How much of JS revenue globally is derived from
similar activity?” asked Alexander Gerko, boss of XTX Markets, a
quant firm, in a LinkedIn post. “Regulators elsewhere should pay
attention.” He might want to be careful what he wishes for. ■

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and markets, sign up to Money Talks, our weekly subscriber-only
newsletter.
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economics/2025/07/10/jane-street-is-chucked-out-of-india-other-firms-should-be-
nervous

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Free exchange

Want to be a good explorer?

Study economics
The battle to reduce risk has shaped centuries of ventures
7月 10, 2025 07:13 上午

DEEP IN ZAMBIA’S Copperbelt province, explorers from Kobold

Metals are testing the ground for a new mine shaft. Although the arc
of copper running through central Africa was first mapped by
Victorian explorers and was mined by a colonial British firm, the
search for deposits has been only occasionally fruitful in the years
since. Kobold’s discovery is the biggest in a century. Born in
California and backed by Bill Gates, the company uses everything
from ancient maps to artificial intelligence in order to learn about
what lies beneath the ground. Perhaps its biggest idea, though, is an

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economic model, pioneered at Stanford University, that helps
process vast reams of information. It guides where Kobold drills, the
most important decision for any miner.

The idea of a purely scientific explorer, financed by maverick

philanthropists, is appealing. In reality, ever since the Renaissance
the vast majority of ventures have been financed by companies and
governments with an eye on profit. As with more typical projects,
investors want to estimate, and then reduce, risk—in much the same
manner as the risk-management department of a modern bank.
Sailing to foreign lands, trekking to new wildernesses and excavating
underground reserves is extraordinarily expensive. It is also fraught
with uncertainty. Companies such as Kobold are just the latest to do
battle with the unknown.

At best, early financiers were able to support those who returned

with evidence of success, even if flimsy. Unfortunately, one batch of
treasures offered little certainty of finding a second or third. Aside
from the ever-present threat of disease and storms, few explorers
understood the resources they sought to extract. Riverbeds moved,
populations migrated, rockfaces crumbled.

In the 17th century financiers began to share risk more often. Even
the most challenging ventures could purchase insurance through
Lloyd’s Coffee House, an insurer that later became known as Lloyd’s
of London, or on Amsterdam’s financial markets. Firms set up for the
purpose of exploration, such as Hudson’s Bay Company and the East
India Company, could not hedge against undefined and unknowable
risks; they could, however, sell contracts that passed some of them
on to others. By 1616 the Dutch East India Company was insuring its
ships by selling sophisticated policies in which the buyer promised to
contribute a share of the voyage’s cost should it meet an
unfortunate end.

Governments and financiers also set out to map the world. The
deluge of information this produced changed their investment

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decisions, allowing them to pick the most promising topographies for
investigation. In the 1760s, for instance, American and British
investors noticed iron-rich rocks on maps of the Andes drawn by
Spanish conquistadors, spurring several expeditions.

Over time, maps, surveys and rock samples transformed exploration.

The additional information was used to produce geological models—
often the result of algorithms borrowed from statistical economics—
that provided best guesses as to the location of economically viable
mineral ores, thus representing predictions about maximum pay-offs.
Mining companies did not spend their time attempting to estimate
and reduce risk. Instead, they simply drilled in such places and
hoped for the best.

Most modern resource exploration still suffers from very low success
rates. Although at least 80% of the world’s valuable resources show
no sign of existence above ground, some 85% of operating mines
were dug as a result of surface observations. Much of what lies
beneath the ground remains a mystery.

Kobold wants to return the focus to risk, by using new algorithms

and data to reduce uncertainty. This includes quantifying how much
geologists do not know—producing somewhat surreal numbers that
indicate how likely a rock is to be somewhere. The idea, pioneered
by Jef Caers, a geologist at Stanford who also designs economic
models, comes from game theory. Faced with two options that hold
an equal probability of success, the choice between them is
arbitrary. When more information becomes available, it becomes less
so. Yet you need to be convinced that the additional information is
relevant, and that obtaining it costs less than just taking an arbitrary
gamble.

Rock and a hard place

Suppose, for a minute, that you find yourself in charge of a

directional drill with two prospective sites to excavate. How do you

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pick between them? A regular mining firm would make a bet on the
rock core’s geology, and drill where it thinks valuable minerals are
most likely to be found. Kobold holds several ideas about what could
be going on beneath the surface at once. Its algorithms then create
thousands of scenarios for each idea; any one could reflect the real
rock core. The algorithms resemble those used by banks to ascertain
the credit risk of countries.

How much is unknown about an area, and where is the uncertainty

concentrated? Kobold can now answer both questions, along with
the probability of finding a mineral in a particular place. The firm’s
geologists then drill the hole that reduces the unknowns most
drastically, rather than at the site where it expects to find the
biggest prize. The idea is that, in time, it will come to know enough
to pinpoint resources. As that will probably take fewer moves than a
rival making a series of guesses about where the richest mineral
seam lies, Kobold’s pay-off will be bigger.

After drilling just a few dozen holes, Kobold has dug millions of
tonnes of copper in Zambia, outperforming local rivals. “If you could
see inside the black box of everything under the Earth’s surface,”
says Kurt House, the company’s chief executive, “you would be a
perfect explorer.” Long dead Victorian gentlemen, who spent their
lives seeking out mysterious and unknowable places, might disagree.
Their financiers, however, would not. ■

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Science & technology

Could hormones help treat some forms
anxiety and depression?
Hormones and mental health :: Mental illnesses that do not respond to standard
treatment could be hormone-driven

Ancient proteins could transform

palaeontology
Buried treasure :: Found in fossils many millions of years old, they could help
scientists study long-extinct species

An interstellar object is cruising through

the solar system
A flying visit :: Its appearance puts a new branch of astronomy to the test

RFK junior wants to ban an ingredient in

vaccines. Is he right?
Well informed :: Studies show that thimerosal does more good than harm

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Hormones and mental health

Could hormones help treat

some forms anxiety and
depression?
Mental illnesses that do not respond to standard treatment could be
hormone-driven
7月 10, 2025 07:13 上午

THEIR NAMES are unknown but their pain is nonetheless evident. A

user on Reddit, a social-media site, was “fairly close to being just
another young man that killed himself because of depression”. On
the website of Menopause Mandate, a campaign group, a woman
tells of her grief “for the lost years where suicide seemed my only
option”.

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Both people described poor mental health that had resisted standard
treatments. Both, eventually, found their ans-wers where
psychiatrists seldom look—their low levels of sex hormones.

Mental illnesses resistant to treatment affect millions of people

worldwide. Around a third of those seen by doctors for major
depression, for example, are in this category. For some of these
patients, an emerging consensus among scientists—bolstered by
evidence from years of research on menopausal women—suggests
that hormonal deficiencies could be causing their conditions.

From a biological point of view, this connection has been hiding in

plain sight. The sex hormones oestrogen, progeste-rone and
testosterone, all of which are produced by both men and women,
are known to be potent governors of behaviour, mood and stress.
Proteins sensitive to oestrogen are found scattered across many
important regions of the brain, and studies have shown that this
hormone can enhance memory formation, recall, decision-making
and problem-solving. Progesterone and testosterone, meanwhile,
exercise a calming effect via interactions with the brain region called
the GABA-receptor complex. Other hormones, such as cortisol
produced by the adrenal glands and those produced in the thyroid,
also play a role in mood and behaviour.

It is evidence from medical practice, though, that is now leading

scientists to look more closely at the role of hormones in mental
health. Data from menopausal women, particularly from the past five
years, have shown that they find relief from symptoms of depression
and anxiety (and have therefore needed fewer antidepressants)
because of hormone-replacement therapy (HRT). The evidence
strongly suggests that a wider group of people—and middle-aged
men and women in particular—could potentially benefit from similar
hormonal treatments.

Start with men. The Endocrine Society, a scientific group, says that
about 35% of men over the age of 45 have hypogonadism, a

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condition in which their testes produce little or no testosterone; it is
rarer for those in their 20s and 30s.

There is a dearth of good data on dia-gnosis of hypogonadism rates

but experts say it is widely underdiagnosed and undertreated. Men
with low testosterone often report symptoms such as depression,
irritability and cognitive impairment.

Even though testosterone-replacement therapy (TRT) is not in the

standard toolkit for treating depression in men, some evidence
suggests it may be useful—a meta-analysis of studies on almost
2,000 men in total, published in 2019, showed that TRT was
associated with a reduction in the symptoms of depression.

In America the popularity of TRT has risen sharply since 2019, with
many men with hypogonadism finding their mental health greatly
improved after receiving it. The perception of TRT, however, has
become muddied by sloppy prescribing practices and the aggressive
promotion of testosterone· as an easy solution for low energy,
muscle growth or ageing.

Women in the run-up to menopause—a period known as

perimenopause—are another group that may be missing out. Some
experience serious mental-health problems. Last year researchers
from Cardiff University published an analysis using data from UK
Biobank, a research body, of almost 130,000 women who had gone
through menopause and who had no history of psychiatric disorders.
During perimenopause, the risk of major depression and bipolar
disorder increased by 30% and 112%, respectively, compared with
the risk of developing the illnesses during their younger reproductive
years.

The group is small: some 1,133 women (0.88%) reported new

psychiatric conditions during this period. But many more are likely to
experience more subtle symptoms, ranging from low mood, anxiety,
mood swings and irritability to aching joints and memory problems

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(often referred to as brain fog). Because these problems may start
during a woman’s 40s, and long before the obvious symptoms of
menopause, such as night sweats, emerge, the correct diagnosis can
be easy to miss.

Enone McKenzie, a consultant psychiatrist specialised in women’s

hormonal health at the Soke, a clinic in London, rattles off symptoms
that can help identify midlife hormone-driven mood disorders in
women. Anxiety, for example, is usually driven by a specific worry or
psychological trigger. But women who, for no reason, wake up with
anxiety, or feel anxious most of the time and overwhelmed by
previously manageable tasks, may have a hormonally driven
condition. She also describes a “smiling depression” where women
feel fine some days and can be suicidally depressed on others.

Important reproductive transition points, such as the period after

having a child, perimenopause and menopause itself are also times
at which women are likely to relapse from psychiatric conditions they
thought they had recovered from. Katie Marwick, a consultant
psychiatrist for NHS Lothian, in Scotland, says that women may
seem absolutely fine but then, as perimenopause approaches, have
serious episodes of illness that can affect their relationships and
jobs. And some women can also experience serious declines in
mental health during their monthly menstrual cycles.

There is still little awareness among patients and doctors of mental-

health conditions related to hormonal changes in both men and
women. But researchers are taking heed. A new study, Our Future
Health, will look in detail at the health of 5m Britons. Dr Marwick
hopes to use this data to find out the extent to which women’s
mental health is affected by reproductive transitions, and determine
the risk of psychiatric admissions during perimenopause. It may be
possible to work out if genetic variants that heighten sensitivity to
hormones exist. That could give clues to the molecular mechanisms
at work in hormone-related mood disorders and inspire new
treatment ideas.

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Doctors and psychiatrists also need to pay more attention. In trying
to diagnose mental-health problems, clinicians routinely evaluate
their patients for psychological, social and lifestyle factors. Hormones
are rarely scrutinised.

Whereas in men a blood test can easily determine low testosterone

levels, testing sex hormones in women is far harder, because their
levels can fluctuate more widely from day to day. Questions from
doctors that probe a woman’s sensitivity to changes in hormones,
therefore, including asking whether she has suffered mental-health
effects from hormonal contraception, can be helpful.

There is still a lot to learn. How sensitive a person’s body is to their

hormone le-vels may, in some cases, be more important than what
those levels actually are. This sensitivity, in turn, may depend on
how a person’s other bodily systems, such as metabolism and
immunity, are working. Sleep can be another contributing factor.
“Sex hormones exist to optimise us for reproduction and that needs
a lot of systems to co-ordinate,” says Dr Marwick.

How many mental-health conditions are driven by hormonal factors

is hard to know. But there is clearly enough evidence to take
hormones and their effect on the mind more seriously in both sexes.
HRT was, for a long period, viewed suspiciously because of an
unreasonable alarm over its safety. Its rehabilitation has been a
boon for menopausal women, their families and society more
broadly. Embracing hormones as a potential treatment for mental
illness could help more women, and men, across much more of their
lives. ■

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Buried treasure

Ancient proteins could

transform palaeontology
Found in fossils many millions of years old, they could help scientists
study long-extinct species
7月 10, 2025 07:12 上午

I gotta get my protein

ANCIENT PROTEINS nestled in fossils contain troves of information

about long-dead creatures. However, like all ancient molecules,
proteins degrade. Until recently the oldest proteins recovered for
reliable, in-depth analysis were around 4m years old. But two
separate studies published in Nature on July 9th, one by researchers
at Harvard University and the Smithsonian Institute and another led
by researchers at the University of Copenhagen, have recovered

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ancient proteins, some of which could be up to 29m years old. The
discoveries should help palaeontologists investigate the behaviour,
diet and evolution of animals long thought too old to be studied with
molecular tools.

Both research teams recovered the ancient proteins from tooth

enamel, the hardest substance in vertebrates’ bodies, in fossils they
assessed to be many millions of years old. They first ground the
enamel to a powder and then applied a chemical solution to draw
out the proteins. To confirm that the proteins were not the result of
modern contamination, they identified chemical damage to the
proteins accrued over time, a process called diagenesis. The amount
of damage lined up with what they would expect for fossils of that
age.

The team from Harvard and the Smithsonian Institute focused on

the enamel of big African animals, such as elephants, in Kenya’s
Turkana Basin, which were between 1.5m and 29m years old
(although they have high confidence only in fossils up to the age of
18m). Finding old proteins in one of the warmest places on Earth,
where biological molecules easily break down, suggested that even
older proteins could be recovered in better conditions. The
researchers from Copenhagen confirmed this suspicion. In the
Haughton Crater in the much colder climes of the Canadian Arctic
(pictured on previous page), they managed to extract protein
sequences from the tooth of a 24m-year-old rhinocerotid, a squat,
single-horned mammal in the rhinoceros family.

Having recovered the proteins, the two teams were able to compare
their sequen-ces against databases of known protein sequences
from other species. This allowed them to place the extinct species
on the tree of life. For example, the Harvard study suggests that an
18m-year-old creature in the Anthracotheriidae family is probably the
ancestor of modern hippos, whereas the close relatives of a rhino-
like animal called Arsinoitherium, thought to be 29m years old, are
all extinct.

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Enrico Cappellini, who was part of the Copenhagen study, says that
the new discoveries expand the timeline of proteins available for
analysis ten-fold compared with ancient DNA (aDNA), which lasts
about 1m years. That means palaeontologists can now understand
the evolution of organisms that are too old for other ancient
molecular analysis. Future analyses of carbon and nitrogen isotopes
within the preserved proteins could also offer insights into the diet,
environment and migratory behaviour of extinct species.

There are tantalising hints that scientists may have even older
proteins to discover. Back in 2009, researchers from North Carolina
State University retrieved fragments of collagen protein from the
fossil of an 80m-year-old duck-billed dinosaur called
Brachylophosaurus canadensis. Although the collagen had degraded
into small bits, they were able to confirm that it was of a specific
kind now only found in birds. Better preserved proteins yet to be
found might be able to reveal even more.

Commenting on the Copenhagen findings, Matthew Collins, a

palaeoproteomics expert at the University of Cambridge who was not
part of either study, says the results are “spectacular if true” and
that they could transform interpretation of fossil records. Because
some proteins in tooth enamel vary between the sexes, they could
help determine the sex of some fossils, which can otherwise be
tricky. Placing species on the tree of life could also clear up long-
running evolutionary disputes, such as the debate over the true
ancestry of horses. Whereas aDNA took palaeontologists into the
distant past, it seems ancient proteins could take them further still. ■

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A flying visit

An interstellar object is
cruising through the solar
system
Its appearance puts a new branch of astronomy to the test
7月 10, 2025 07:13 上午

ON THE NIGHT of July 1st, in a remote corner of Chile, a small

robotic telescope noticed something moving in the sky. What at first
seemed a routine detection of an object travelling through the solar
system soon turned out to be anything but. The object’s trajectory
revealed it to be a much rarer visitor than first thought. Formed
around a distant star elsewhere in the Milky Way, it is an interstellar
wanderer, not a merely interplanetary one.

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That realisation sparked a scramble. “It’s been full gas for the past
week,” says John Noonan, an astronomer at Auburn University in
Alabama. 3I/ATLAS—named after the Asteroid Terrestrial-impact Last
Alert System, the project that discovered it—is only the third such
interloper ever spotted. Dr Noonan is one of the authors of a quickly
written paper that tries to establish some basic facts about
3I/ATLAS, including what it is (a comet); how big (perhaps 10km
across); how fast it is moving (around 60km/sec) and how far into
the solar system it will come (well inside the orbit of Mars; see
chart).

Most excitingly, 3I/ATLAS offers a chance to test some early theories

of interstellar-object-ology, a fledging branch of astronomy (though
one in need of a snappier name) that began to receive serious
attention only after the detection of 1I/’Oumuamua in 2017, the first
interstellar object discovered. “We think these are the most common
macro-scale objects in the ga-laxy,” says Chris Lintott, an astronomer
at the University of Oxford. “In hindsight it’s odd that people hadn’t
been thinking more about them before.” The current thinking is that
interstellar objects (ISOs) are leftover bits of protoplanetary discs,
the doughnuts of dust and ice that surround young stars and from
which their planets condense. Some 90% of the asteroids and
comets formed this way might be ejected from their parent star
systems by gravitational interactions with bigger objects.

One paper, published in 2018, concluded that there might be around

1026 ISOs in the Milky Way, a million billion times more than the
number of stars. Others have modelled how they spread through the
galaxy (in braided streams, it seems); or worked out that, because
of the Sun’s orbit around the galactic core, they should come more
often from certain directions. A study from 2019 proposed that ISOs
could help explain planet formation: a tiny fraction of ISOs might get
captured by young stars and act as nuclei around which full-size
planets can grow.

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In a preprint posted online on July 9th, Dr Lintott and his colleagues
apply some of these new theories to 3I/ATLAS. They conclude that
there is a two-thirds probability that it is more than 7bn years old—
around half the age of the universe, and far older than the Sun. Its
trajectory suggests it comes from a star somewhere in the Milky
Way’s “thick disc”, a group of old stars that sit above and below the
central plane of the galaxy. If so, chemical differences between old
and young stars mean it should contain more water than comets
native to Earth’s solar system. Such predictions will be checked as
bigger telescopes catch sight of the comet. The James Webb Space
Telescope, a powerful instrument launched in 2021, could make
observations towards the end of July, when 3I/ATLAS comes into its
field of view.

As 3I/ATLAS approaches the Sun, it will grow brighter and begin to

shed parts of itself, making it easier to study. Frustratingly, it will
disappear from earthly view in September before its closest
approach to the Sun on October 30th. But it will remain visible from
Mars. Plans are afoot to get probes there to take pictures of their
own—though one called MAVEN, which carries an instrument
capable of probing the comet’s chemical composition, may be
decommissioned on October 1st as part of big cuts planned to
NASA’s budget. “We’ll be taking our glasses off right before the
fireworks,” Dr Noonan says, glumly.

Still, the future of ISO-ology looks bright. The Vera Rubin

Observatory in Chile, which saw its first light on April 15th, could
spot dozens of ISOs over the next ten years. At that point, says Dr
Lintott, “We’ll have a proper population of these things, which will be
transformative.” It may even be possible to send a probe to look at
one up close. The European Space Agency’s Comet Interceptor
mission, due to launch in 2029, will sit in a parking orbit waiting for
a comet to chase after. But it could also run down an ISO, if a
suitable one presents itself. Astronomers have dreamed of building
an interstellar probe for decades. But why go to the trouble of flying

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all the way to an alien star system when the alien star system can
come to you? ■

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technology/2025/07/09/an-interstellar-object-is-cruising-through-the-solar-system

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Well informed

RFK junior wants to ban an

ingredient in vaccines. Is he
right?
Studies show that thimerosal does more good than harm
7月 10, 2025 07:12 上午

ON JUNE 26TH a vaccine advisory panel installed by Robert F.

Kennedy junior, America’s health secretary, recommended that
thimerosal (also spelled thiomersal), an ingredient used in some
multi-dose vaccine vials, should be removed from all flu jabs.

Mr Kennedy says that thimerosal is a neurotoxin that causes

neurodevelopmental disorders, notably autism, in children. So

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against the chemical is he that in 2014 he published a book
condemning it. His panellists seem to share his opinion: five out of
seven voted in favour of the recommendation. An American ban on
thimerosal now seems imminent. The evidence, however, strongly
suggests this is a mistake.

Thimerosal is an antimicrobial agent that has been used for decades

in multi-dose vaccine vials to reduce the risk of contamination from
repeated syringe insertions. Sceptics gripe that it contains
ethylmercury, a compound of mercury. Exposure to high levels of
this metal has been shown to impair cognitive deve-lopment in
children. When American rates of autism were found to be
increasing in the 1990s, the thimerosal in childhood vaccines was
closely scrutinised. As a precautionary measure, the Food and Drug
Administration (FDA) recommended that thimerosal should be
removed from childhood vaccines.

Since 2001 thimerosal has consequently been reduced in or removed

from almost all vaccines recommended for American children aged
six and under. Most now come in single-dose vials that need no
preservatives. The lone holdouts were some multi-dose flu shots
(about 4% of those administered in the most recent flu season)
which, being cheaper and more durable than single-dose vials, are
key to efficient annual mass-vaccination campaigns. In any case,
FDA guidance suggests a single dose contains about as much
mercury
as a tin of tuna.

The weight of scientific evidence strongly suggests that the FDA was
being too cautious. A study by scientists at the University of Aarhus,
published in 2003 in Pediatrics, found that rates of autism in
Denmark increased despite the removal of thimerosal from all the
country’s vaccines in 1992.

What’s more, large population studies in America and Europe have

consistently shown no link between exposure to thimerosal and

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autism. Notably, a study of over 100,000 children in Britain published
in Pediatrics in 2004 conclu-ded that there was no evidence for
thimerosal causing neurodevelopmental disorders (tics were the only
potential exception). The link to autism has been “thoroughly
debunked”, says Kathryn Edwards, an expert in vaccine safety who
recently retired from Vanderbilt University. In fact, the only well-
established health risks are minor symptoms such as redness and
swelling at the site of an injection due to an allergic reaction to the
chemical.

Although thimerosal is barely used in American vaccines, a ban may

still do harm. It would make the cheapest flu vaccines less available
to the most poorly served communities and slow America’s response
to pandemics, says Jake Scott, an infectious-disease specialist at
Stanford University. Developing alternative chemicals is possible, but
would take years. Dr Edwards worries that the real damage could
arrive in the long term. If America’s public-health authorities begin
lending credence to the unsupported beliefs of vaccine sceptics, she
says, a very worrisome precedent will have been set.■

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Culture
In war, incentives matter more than
courage
Invisible hand-to-hand combat :: Economics is a useful tool for understanding
conflict, as a new book shows

What Superman tells you about American

foreign policy
A man of steel for all seasons :: Should a man who can do anything choose to do
nothing?

How Bad Bunny leapt to the top of the

global music charts
A thumping success :: The Puerto Rican rapper has millions of fans beyond the
Hispanophone world

Handling feelings with rubber gloves: the

odd life of Muriel Spark
In her prime :: An abandoned son, scorned lovers and dazzling, manipulative prose

Why the left gains nothing from pop stars’

support
Back Story :: Artists are entitled to share their views. Doing so is not always noble or
wise

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Invisible hand-to-hand combat

In war, incentives matter

more than courage
Economics is a useful tool for understanding conflict, as a new book
shows
7月 10, 2025 07:13 上午

Blood and Treasure. By Duncan Weldon. Pegasus Books; 320

pages; $32. Abacus; £25

OF ALL HUMAN activities, war is the least rational. It costs a fortune.

It spreads death and misery, from the killing fields of Sudan to the
tunnels of Gaza. It is often started out of personal hubris or blind
patriotic zeal: think of Napoleon’s invasion of Russia or Japan’s
decision in 1941 to provoke a war with a superpower it could not

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hope to defeat. So you might think economics—a discipline
associated with rational self-interest—would have little to say about
it. You would be wrong, argues Duncan Weldon, a former writer for
and occasional contributor to The Economist, in “Blood and
Treasure”.

Economists think a lot about incentives—as do soldiers. When Italian

cities hired mercenaries to fight their wars in the 15th century, the
condottieri, or mercenary leaders, devised a complex strategy of
feints and retreats to put the enemy off balance. At least, that’s
what they said they were doing. Though they sombrely cited Roman
and Greek military history to justify their actions, in fact they just
wanted to avoid battle. They were paid either way, as were the hired
swords on the other side. By tacit agreement they kept failing to
fight—and grew rich. Some then splashed out on conspicuous
consumption, such as paintings by Leonardo da Vinci, thus helping
bankroll the Renaissance.

Sometimes a military strategy seems irrational, but is not. Consider

France’s reluctance to adopt the longbow. English longbowmen
slaughtered a much larger French army at the battle of Agincourt in
1415. The French should have seen this coming, since the English
had pulled off exactly the same trick at the battle of Crécy, 69 years
before. A longbow was difficult to master, but a skilled archer could
fire six shots in the time it took a crossbowman to fire one. English
kings required their male subjects to practise archery every week.
French kings, by contrast, discouraged it.

As it happens, the one who lost at Agincourt was known as Charles

the Mad. But his no-longbow policy was quite sane, Mr Weldon
argues. France was unstable. Kings had to worry more about
internal threats than foreign ones. The last thing they wanted was
legions of peasants who could massacre mounted knights with
weapons they could easily make at home. In England the monarchy
was more secure (at least, until the Wars of the Roses), so kings
favoured the weapon that would help them win foreign wars.

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Incentives matter in other kinds of conflict, too. Pirates of the 18th
century were also keen to avoid fighting. Not only was it dangerous;
it risked sinking the vessel they were trying to capture, plunging all
those pieces of eight into the depths. They threatened to slaughter
crews that resisted, but spare those who surrendered without a
fight. To communicate this clearly, regardless of language barriers,
they adopted the Jolly Roger flag—an early example of effective
global branding.

Victory, in popular myth, depends on the exceptional courage and

skill of the nation to which the mythmaker happens to belong. Mr
Weldon offers more convincing explanations. The Vikings, for
instance, were successful not because they went “berserk” and ran
into battle terrifyingly naked, but because they had two advantages
over their Anglo-Saxon victims. First, they were not Christian. They
had no compunction about raiding churches, which were full of
treasure and essentially unguarded, since the locals deemed it
sacrilegious to plunder them.

Second, Viking longboats were the stealth fighters of the Dark Ages.
A conventional boat would make landfall wherever the prevailing
winds blew it, and then have to creep along the coast towards its
target, giving its intended victims plenty of time to hide. A Viking
longboat, by contrast, could use its sails for most of the journey and
then switch to oars when still just over the horizon. Thus, a
monastery might have only a couple of hours’ notice that it was
about to be raided.

The Mongols’ military triumphs have sometimes been ascribed to

their horsemanship. Mounted archers would race up, loose a hail of
arrows and dash away—a devastating tactic. But logistics mattered
more, especially “the easy availability of fresh remounts”. In 1300
the Mongol empire had half the horses in the world: perhaps 20 for
every warrior. So the great horde could sweep across the steppe at a
pace of 80 to 100 kilometres a day, while its foes barely managed
ten. Mr Weldon argues that, by unifying Eurasia and promoting trade

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between China and Europe, Genghis Khan was the “father of
globalisation”.

In the late 18th and early 19th centuries, Britain’s Royal Navy ruled
the waves. Between 1793 and 1815, it lost one ship for every seven
enemy vessels it destroyed or captured. Looking only at big “ships of
the line”, the ratio was one to 33. Again, the reason is not that
British sailors were braver than French ones, but that their
commanders’ incentives differed. A French captain who surrendered
his ship faced the death penalty, so the shrewd ones avoided battle.
British captains were given a fat share of the value of ships they
captured, which made them more aggressive.

Though economics is a useful tool for understanding war, individual

economists have often misunderstood it. Walt Rostow, a star
economist who became President Lyndon Johnson’s national security
adviser, thought the Vietnam war could be won by bombing the
north’s industrial base to cinders. He misunderstood the incentives at
play. Ho Chi Minh, North Vietnam’s leader, cared far more about
uniting the country under communist rule than about protecting
bridges and factories in the north. And the harder America hit the
communists, the more aid the Soviet Union and China sent them.
Even dropping hundreds of kilograms of explosives per Vietnamese
person was not enough to prevent America’s eventual defeat.

Time and again, Mr Weldon spots the invisible hand behind

hostilities. Yet he neglects one especially useful tool: public-choice
theory. This idea, for which James Buchanan won a Nobel prize in
1986, holds that many policies exist because they benefit self-
interested decision-makers rather than the people they are meant to
serve.

Consider Vladimir Putin’s invasion of Ukraine. It was not in Russia’s

interest: it has cost 1m Russian casualties and made Russia a pariah
in the West, dependent on China to stay afloat. Mr Putin started it
for selfish reasons: he dreamed of going down in history as a great

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conqueror, and he knew from experience that a war could win him a
burst of patriotic support and an excuse to call dissidents traitors
and lock them up. What was irrational for Russia made perfect sense
for its warmonger-in-chief. Alas, since the supply of awful leaders
greatly exceeds the need for them, wars will keep breaking out.
Sometimes, the dismal science offers dismal conclusions. ■

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courage

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A man of steel for all seasons

What Superman tells you

about American foreign policy
Should a man who can do anything choose to do nothing?
7月 10, 2025 07:12 上午 | NEW YORK

Can’t help but muscle in

IT IS HARD to take a man in blue tights and red briefs seriously. But
in a new movie, released on July 11th, Superman has taken on the
extremely serious job of being the world’s policeman. The Man of
Steel (David Corenswet, pictured, snapping on the Spandex for the
first time) stops one country from invading another. He has done a
good thing, he feels, and saved lives. Yet Lois Lane (Rachel
Brosnahan, who brings a welcome spikiness to the role) is sceptical
of unilateral action: does Superman stop to think about the

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consequences of getting involved in other countries’ conflicts, she
wonders?

Such geopolitical musing might seem out of place in a superhero

film, usually a vehicle for rippling muscles and elaborate stunts. But
many have also been parables of how America feels about its role in
the world. This is particularly true of stories about Superman, whose
stated aim is to defend “truth, justice and the American way”. The
character has endured for almost nine decades because he is
handsome, bland and adaptable—able to reflect whatever “the
American way” means at any particular moment.

Rick Bowers, author of a book about Superman, described him as

the “quintessential American”. Though the hero arrived in the
country from the planet Krypton as a baby, he was brought up in the
Midwest, learned to love hard work and became the only American
who can literally lift himself up by his bootstraps. Superman was
created by Jerry Siegel, the son of Lithuanian Jewish immigrants.
Siegel, an awkward child, spent his formative years making up
stories. He was close to his father, who ran a second-hand clothes
shop in a rough part of Cleveland. After his father died during a
robbery, Siegel’s imaginings cohered into a character with
superhuman strength. In the first tale, his hero rescues a middle-
aged man from an assailant.

The public met Superman in June 1938, holding a car aloft on the
cover of “Action Comics 1”. On the first page, Superman realises “he
must turn his titanic strength into channels that would benefit
mankind”, and ever since he has exuded square-jawed goodness
and noblesse oblige. Initially his focus was domestic—in that first
story he saves an innocent woman from going to the electric chair—
rather than international. America was isolationist at the time,
despite Franklin Roosevelt’s growing concern about Nazi Germany.

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Siegel and Joe Shuster, the illustrator, faced a dilemma when
America entered the war. The character’s sense of justice would
undoubtedly have led him to intervene on the Allies’ side. But even
the fearsome Luftwaffe would have been no match for the caped
wonder. They worried that soldiers would be dispirited by tales of
Superman’s easy victories. Some 80% of the American army’s
reading material was comics, with Superman atop the charts.

So they had Clark Kent, his civilian alter ego, rejected from the army
after failing an eye test. Superman spent the war fighting villains,
some of them German and Japanese, elsewhere. He was still used
as a symbol of Americans’ valour and righteousness. A cover of a
comic in July 1944 depicted Lane arm-in-arm with servicemen,
declaring: “You’re my Supermen!”

Later Superman grappled with whether he should interfere in earthly

affairs. In “Superman II” (1980) he forsakes his powers in order to
live a normal life with Lane, which leaves America, and the world,
vulnerable to the ambitions of General Zod, a belligerent
expansionist. (It is not hard to parse the message of this cold-war-
era story.) Naturally the film ends with Superman recovering his

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strength, returning to his duty as global protector and reinstating the
American flag above the White House.

Comics and films of the late 20th and early 21st centuries depict
Superman as increasingly nervous about overstepping when it
comes to foreign intervention and questions of sovereignty. “What
right do I have”, he asks at one point, “to impose my values on
anyone?” He aims to achieve as much as possible with as little force
as possible, using surgical strikes to eliminate terrorist cells. This
mirrors America’s policy, since 2002, of killing individual foes with
missiles fired from drones.

Now the Man of Steel has been recast to fit today’s politics. The new
“Superman” film has the usual hokey dialogue and planetary peril.
But—without giving too much away—it reveals that the conflict that
he has rushed into is a setup. This is, more or less, how some of
Donald Trump’s foreign-policy team feel about skirmishes elsewhere:
that America loses by getting involved. It may seem odd for a man
who can do anything to contemplate doing nothing. But it makes for
a timely film. ■

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A thumping success

How Bad Bunny leapt to the

top of the global music charts
The Puerto Rican rapper has millions of fans beyond the
Hispanophone world
7月 10, 2025 07:13 上午 | MEXICO CITY

There’s no smoke without fire beats

MOST MUSICIANS, when they decide to do a concert residency,

head to Las Vegas. In recent years megastars including Adele, Celine
Dion and U2 have made tens, if not hundreds, of millions of dollars
playing to crowds in Sin City. But not Bad Bunny. On July 11th the
Puerto Rican rapper and singer will begin a run of 30 concerts in San
Juan, the capital, before setting off on a world tour. It is symbolic of
how the musician has become a global hitmaker while keeping one

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foot on the island. “He is Puerto Rican and he wants you to know
it,” says Kacho López Mari, a film-maker who has worked with the
musician.

It took Bad Bunny (whose real name is Benito Antonio Martínez

Ocasio) less than a decade to hop to the top of pop music. In 2013
he began uploading his songs to SoundCloud, a streaming site.
Three years later he was signed by a record label. And two years
after that he collaborated with Cardi B, an American rapper, and J
Balvin, a Colombian singer, on a track called “I Like It”, which topped
the Billboard Hot 100 chart in America.

Since then Bad Bunny’s fans have multiplied like, well, rabbits. In
2018 his songs were streamed 2.5bn times according to Luminate,
an analytics firm; by 2024 that figure had jumped to 11.5bn.
Between 2020 and 2022 Bad Bunny was the most-played artist on
Spotify, making him the first musician to claim the top spot for three
consecutive years.

Bad Bunny’s record-breaking is all the more notable because he raps

and sings almost exclusively in his mother tongue. In the early
2000s the biggest rappers in the world were all American; Latin
artists, such as Enrique Iglesias, had to perform in English if they
wanted to reach a global audience. No longer.

In 2022 Bad Bunny’s album “Un Verano Sin Ti” (“A Summer Without
You”) was the first Spanish-language record to be nominated for
Album of the Year at the Grammys. His forthcoming tour sold 2.6m
tickets in a week. The majority of the concerts will take place in
Hispanophone countries, including Argentina, Chile, Mexico and
Spain. But Bad Bunny will also perform in places with very few
Spanish speakers, such as Japan and Poland.

Three factors explain his success. The first is the music itself. Bad
Bunny puts a Latin twist on popular genres such as trap (a style of
hip-hop) and house (a type of electronic music) by incorporating

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local sounds such as reggaeton, plena and salsa. Plena, an Afro-
Puerto Rican mode, is highly rhythmic, involving syncopated beats
on instruments such as panderos (hand drums) and maracas. When
combined with Bad Bunny’s swagger, this makes for tracks both
danceable and distinctive.

Bad Bunny borrows freely and often, never hewing to one influence
for long. This keeps his work exciting. “We never know what we’re
going to get,” says Vanessa Díaz of Loyola Marymount University in
Los Angeles, who teaches a course on Bad Bunny and is the co-
author of a forthcoming book on the musician. “He doesn’t follow
trends. He sets them.”

The second factor is his lyrics. Some of Bad Bunny’s fans will not
understand what he is saying, but those who do often appreciate his
political sensibilities. In 2019 Bad Bunny collaborated on a track,
“Afilando Los Cuchillos” (“Sharpening the Knives”), which criticised
Puerto Rico’s governor at the time and the “manipulation,
corruption, conspiracies” of the island’s politics. The title of “El
Apagón” (“The Blackout”), a hit in 2022, refers to the regular power
failures that plunge the island into darkness. In a documentary film
tacked on to the music video, locals complain about gentrification
and being forced out of their homes by luxury property developers.
“Esta es mi playa / Este es mi sol / Esta es mi tierra,” the song
asserts: “This is my beach / This is my sun / This is my land.”

He encourages listeners to feel pride in where they are from. Ms

Díaz says Bad Bunny has made speaking Spanish cool at a time
when it is often denigrated in America. He sees his Puerto Rican
upbringing as something to honour, not ignore. “All of PR is my
crew,” he raps on “ACHO PR”. Fancy festivals in California are all well
and good, but he prefers “singing for free in Loíza than at
Coachella”.

The third reason for Bad Bunny’s breakout is timing. Demand for
Spanish-language culture has soared. In the first half of 2024

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viewers spent almost 7bn hours watching shows in Spanish on
Netflix, according to Omdia, a research firm. Bad Bunny has ridden
that wave and helped it surge. Anamaria Sayre, a co-host of
Alt.Latino, a music show on National Public Radio, says that when
she was growing up in America, “You didn’t hear Spanish music in
white spaces...now it is everywhere.”

Bad Bunny is certainly doing his best to make sure that it is: he will
be stopping in 18 countries across four continents on his tour. “We
will look back on this as a turning-point,” says Ms Díaz. “Bad Bunny
didn’t just succeed in Spanish—he changed what global success
could look and sound like.” Yet even when he is “travelling the whole
world”, Bad Bunny says on “ACHO PR”, he is still the young man
“who sat in La Perla with my grandma”. ■

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In her prime

Handling feelings with rubber

gloves: the odd life of Muriel
Spark
An abandoned son, scorned lovers and dazzling, manipulative prose
7月 10, 2025 07:12 上午

Writing off her losses

Electric Spark. By Frances Wilson. Farrar, Straus and Giroux; 432

pages; $35. Bloomsbury Circus; £25

HOW DO YOU write a book? For Muriel Spark the process was
simple. First, the novelist said, “I write the title, and then I write my
name.” Then, she explained, “I write ‘Chapter One’ and then I write

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on.” Spark’s account of her method was clear, straightforward—and
total nonsense.

So how did she write a book? The actual answer was with great
difficulty. Spark’s books were slim but her archives are capacious:
the box files extend to 195 feet, or 60 metres, “equivalent in height
to an airport control tower”. Remove “The Prime of Miss Jean
Brodie”, “The Ballad of Peckham Rye” and the 20 other novels she
produced and you will still be left with at least 194 feet of letters,
cast-offs and notes. The idea that all this material was turned out
effortlessly was rubbish, as Spark well knew: “It has always”, she
wrote, “been my intention to practise the arts of pretence and
counterfeit on the reader.”

This was particularly true, it turns out, when it came to her own life.
Biographers, it is often said, “add a new terror to death”. For Spark—
the subject of two biographies while she was alive, both of which
she loathed—they added a new terror to life, too. She attempted to
control her story by writing it herself but that was largely a failure:
Spark could write a book only once she knew “how it is going to
end”. That, for autobiography, is rather tricky.

Biography, then—which Frances Wilson attempts in this beautifully

written book—is the closest readers can get to Spark, which is to
say: not that close at all. “What chance”, as Julian Barnes, a novelist,
has put it, “would the craftiest biographer stand against the subject
who saw him coming and decided to amuse himself?” Spark’s craft—
and craftiness—are clear from the beginning, not least because her
habit of not throwing anything away created such a whopper of an
archive. If her books, writes Ms Wilson, are “‘minor’ surrealist
masterworks” then her archive is “a major realist masterwork”.

Some things are clear: Spark begins life, dully, in Edinburgh,

attending a prim school that would inspire “The Prime of Miss Jean
Brodie” and writing the sort of earnest poetry that involves the word
“’Tis”. Then things perk up: she marries a “Mr Spark”, moves to

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Southern Rhodesia (now Zimbabwe) and starts to meet people with
names such as “Princess Marie Bonaparte” and “Leigh Francis Howell
Wynne Sackville de Montmorency Vaughan Henry”. Sparkian things
happen to her. A cousin is put in an orphanage. Mr Spark turns out
to be a lunatic and tries to jump out of a window. A colleague turns
out to be a spy. Almost everyone seems to have affairs. Absolutely
everyone seems to have arguments about modernist poetry.

Later, Spark would write a short story in which she imagines that, as
a baby, she was like a human radio receiver “able to tune in from
her cot in Edinburgh to scenes…from around the globe”. She
certainly seems to have been tuned in to the literary moment.
Anyone who is anyone in English 20th-century letters has a walk-on
part here: Evelyn Waugh calls her a saint; W.H. Auden is awed by
her; Graham Greene sends her cheques and bottles of wine.

What she does not seem to be is very tuned in to her emotions. A

jilted lover once, somewhat spitefully, wrote that Spark was chilly,
and approached “human feeling…only with rubber gloves”. It was
cruel—and true. Her life is characterised by the same strange, stark
abruptness as her prose. She decides to end an affair with a man
because “One day I woke up and decided that I didn’t like him.”

Her iciest moment was her decision to leave her son. A lot has been
written about the different parenting standards to which men and
women are held. Rightly: this inequality can be seen in everything
from literary lives to the English language itself (consider the
different meanings of the verbs “to mother” someone and “to father”
them). Yet Spark’s description of leaving her son is, even by her
standards, brittle. When he is five, she flees Southern Rhodesia,
depositing her son in a convent school and abandoning his nanny.
“We were sad to leave each other,” Spark wrote. She was referring,
Ms Wilson wryly notes, not to the boy but to the nanny.

It is a typically Sparkian moment: elegant, abrupt, emotionally odd.

Some writers become an adjective: Dickensian, Orwellian, Joycean.

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“Sparkian” has not entered common parlance but, by the time you
finish this brilliant book, you think it probably should. For, even after
400 pages, Spark herself remains elusive. ■

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Back Story

Why the left gains nothing

from pop stars’ support
Artists are entitled to share their views. Doing so is not always noble
or wise
7月 10, 2025 07:13 上午

THE HIGH priests of speaking out are John Stuart Mill, an English
philosopher, and Martin Niemöller, a Lutheran pastor. “Bad men need
nothing more to compass their ends,” Mill warned, “than that good
men should look on and do nothing.” Niemöller famously
ventriloquised the many Germans who kept silent when the Nazis
“came for the socialists”, the trade unionists and the Jews: “Then
they came for me—and there was no one left to speak for me.”

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Like Mill and Niemöller, artists and musicians who call out injustice
avowedly see standing up for the oppressed as a moral obligation.
Speaking out on world affairs is in vogue, as it tends to be amid
political ructions, and much of it is doubtless heartfelt and sincere.
But it can also have other motives—and unintended consequences.

Two developments explain the current clamour. First, the re-election

of Donald Trump, a bogeyman for the showbiz elite, give or take a
few country singers and wrestlers. At a recent gig in Britain, Bruce
Springsteen (pictured) labelled him “an unfit president” in charge of
a “corrupt, incompetent and treasonous administration”. Olivia
Rodrigo, Katy Perry and others have criticised his migrant round-ups
and deportations.

The other new factor is Gaza. At the recent Glastonbury music

festival, the frontman of Bob Vylan, a punk duo, followed his de
rigueur “Free Palestine” chants with another that advocated “Death,
death to the IDF”, or Israel Defence Forces; some in the crowd
joined in. Bob Vylan was the warm-up act for Kneecap, a hip-hop
trio already in hot water after a show in which a band member
yelled “Up Hamas! Up Hizbullah!”

Publicly wishing death on anyone is grotesque (and potentially

illegal). But in general, it must be said, musicians should be free to
express their political opinions, whether sensible or idiotic. After all,
song lyrics themselves are often political. Mr Springsteen denounces
conflict in his song “War”; Bono and U2 lament the Troubles in
Northern Ireland in “Sunday Bloody Sunday”. Expecting them to
keep schtum about such subjects when the music stops would be
odd.

Artists have the same right as everyone else to speak out. But doing
so is not always noble, sensible or effective. One wrinkle is that
outbursts which purport to be bold are often predictable, even
conformist. Festivals like Glastonbury might as well fly banners
proclaiming that the bands on stage support the Palestinians unless

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otherwise stated. Many young fans do, too. Speaking out to people
who already know your views or largely share them is not what
Niemöller envisaged.

Meanwhile, evidence suggests that celebrities change few minds—or

not in the way they intend. Take the galaxy of stars who backed
Kamala Harris last year, of whom the brightest was Taylor Swift.
Pollsters found her support turned more voters off Ms Harris than it
attracted, perhaps because it fed fears of an establishment stitch-up.
Tirades like Mr Springsteen’s are grist to an omnivorous metabolism
that turns all publicity to Mr Trump’s advantage, showcasing his
pugilism and hogging attention. (He dismissed Mr Springsteen as a
“dried out ‘prune’ of a rocker” and claimed Ms Swift was “no longer
‘HOT’”.)

In any case, artists and their admirers are prone to ascribe more
power to their craft than it usually wields. Autocrats and despots, it
is true, are wary of mass gatherings like rock concerts: a crowd can
turn into a mob and then into a revolution. Tyrants often crack down
on dissident artists. But they crack down on lots of people. When
musicians have real clout, it mostly comes from amplifying or
refracting a cause in shimmering work—not clunky rants. Think of
Nina Simone’s sculpted fury in “Mississippi Goddam” or Bob Dylan’s
lapidary imagery in “The Times They Are A-Changin’”.

Times have indeed changed. More than their forebears, today’s

celebs are expected to share their private lives and convictions. In
this coercive culture, tact is timidity and silence is complicity in
violence. To adapt Mill, speaking out means you have done
something and are therefore good. Some stars seem less to use
their fame to publicise a cause than use a cause to publicise
themselves.

The pursuit of moral glamour can set off a spiral of grandstanding,

which in Britain led to a singer calling for death at a music festival.
This kind of speaking out draws attention only to itself. “The more

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time [politicians] talk about Bob Vylan, the less time they spend” on
Gaza, the group protested amid the ensuing furore. Quite. ■

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Economic & financial indicators

Economic data, commodities and markets
Indicators ::

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Indicators

Economic data, commodities

and markets
7月 10, 2025 07:13 上午

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Obituary
Jimmy Swaggart tripped up on his progress
to Heaven
Praying and weeping :: America’s most popular hellfire preacher of the 1980s died on
July 1st, aged 90

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Praying and weeping

Jimmy Swaggart tripped up

on his progress to Heaven
America’s most popular hellfire preacher of the 1980s died on July
1st, aged 90
7月 10, 2025 07:13 上午

HE HAD BEEN there before. Ever since 1978—when in vision he

stood at the portals of glory on the glassy sea, with the cherubim
singing “Holy, Holy, Holy”; when he saw God sitting on the throne,
and at His right hand his personal Redeemer, Jesus Christ—he knew
things would not be straightforward. The scene was familiar, for it
was there in Revelation, plain as day; but his feelings shocked him.
He didn’t shout “Hallelujah!”, or fling up his arms in adoration and

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praise. He wasn’t overcome with gladness. Instead, his body shook
until he fell to the ground.

What did he fear? And why? Few people in their lifetimes could have
harvested more souls to be saved by the Blood of the Lamb. At the
peak of his ministry in 1986 he was on more than 3,000 American
local TV stations as well as cable, and transmitted to 140 countries.
Dozens of his books were sold. Income from donations and
merchandise was $500,000 a day. Every Sunday 7,500 souls packed
his Family Worship Centre in Baton Rouge, Louisiana, and 100,000-
seater stadiums were filled to capacity as he toured up and down
the land. They came to watch him dance, and shout, and whisper,
and weep; sing gospel songs at the piano in his ringing baritone; fall
to his knees, speak in tongues. The Holy Spirit laid such burdens on
his heart that it also filled the congregation, til they cried out and
were slain with him. Even faithless onlookers, the secular humanists
and the news media on their toboggan slide to Hell, said no one
could hold a crowd as he could.

In an age of televangelists, he stood out. He was not one of those

pompadoured pretty boys who called themselves preachers. He
spoke the plain truth of the Bible to people who had turned their
itching ears away (II Timothy, 4:4). Poverty brought him from the
backwoods, preaching God’s word in the street and from flatbed
trucks. In an ancient Plymouth he criss-crossed the South in the
1950s, making perhaps $30 a week, finding beds where he could.
He anointed the sick with oil. If, after many devoted years, he had
become a billionaire, with two Lincoln Town Cars, a private jet, an
estate of 200 acres and a plantation-style house of 9,000 square
feet; if he wore a gold Rolex encrusted with diamonds and had, in
his master bedroom, a Jacuzzi with solid gold taps in the shape of
swans, this was God’s reward for his faithfulness.

He had been at the service of the Holy Spirit since he was eight
years old, when He spoke to him outside the Arcade Theatre in
Ferriday, Louisiana as he waited to see a movie. The Spirit told him

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not to go in, and made the machine jam when he tried to pay. His
father was already a part-time preacher in the Pentecostal
Assemblies of God, as well as a part-time grocer, trapper and
bootlegger. As for him, he prepared for his calling by living cleanly;
as well as praying hard for the salvation of his first cousin, Jerry Lee
Lewis, whose life was a mess of drinking and cheating but who, with
his “Great Balls of Fire”, was already a rock ‘n’ roll star.

He could not guarantee that Cousin Jerry was not in the other place.
That was up to the judgment of God, which he was facing now. He
was praying and praying, unable to look at Him. Surely he himself
was not destined for the Fire. For as Heaven was a literal place, so
too was Hell (Luke, chapter 16). It was the torment department of
Sheol, or Hades, in the heart of the Earth, where Satan ruled and
from which dark forces attacked him. One took the hideous shape of
a bear with the face of a man; another was the Evil One himself, as
a hundred-pound weight on his back. When he shouted the name of
Jesus, the bear-man collapsed and twitched like a wounded snake.

In the great war between Good and Evil he fought as hard as he

could. But he still had the sin nature all human beings shared. Ever
since Adam and Eve had disobeyed God, men and women had been
born broken; unless they turned to Jesus Christ, none would be
saved. Even he had shown that inner weakness by casting stones at
other preachers, calling them adulterers, when in the late 1980s he
too was visiting a pretty woman in a hot-sheet motel along Airline
Highway outside New Orleans, where he asked her to pose for him.
With her he called himself “Billy” and wore hats, as if anyone could
hide from the gaze of God—or from the camera of the private
detective one rival employed to catch him.

He knew from his vision, as he huddled before the Lord, that he

would see every sin he had committed. That one was the worst. He
had sinned against his faithful wife Frances, his consort of 36 years,
and against the Lord whom he had loved for even longer. In
February 1988, before his congregation and on national television,

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he had repented with many, many tears. He asked for this stain to
be washed into the seas of God’s forgetfulness and not to be
remembered against him any more.

He hoped this was the case. He hoped too that the Lord’s memory
was not jogged by that time in 1991 when he was caught in a car
with a prostitute in California. For he had suffered from his disgrace.
Donations had fallen away, his ministry had shrunk, and the private
jet had to be sold. He was suspended from the Assemblies of God
and forbidden to preach for a time, though he soon defied that
order. He went on preaching, though independently and on far fewer
channels, til the end of his days.

His battle against the world, the flesh and the Devil had not been a
total success. But he had still brought thousands of souls to Jesus
Christ. They had been saved from the false cults of other religions,
or from ignorance or indifference, by recognising Him. So when God
now commanded him to stand up on his feet and look, look at his
Redeemer, it should have been easy. As he got up, though, he was
still unsteady. His only prop was his Bible, and he did not have it
with him. But he didn’t need it, because he was suddenly washed,
released, transformed, in the Blood of the Lamb, as if a warm bath
flowed around him.

“Right,” said God. “You’d better come in.” ■

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progress-to-heaven

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