1. Interesting points about the speed and scale at which the US national security state emerged.
The political unity and speed with which the postwar security state was constructed remains breathtaking. The US army in mid-1939 was smaller than Portugal’s; by the end of the second world war it was among the largest. In 1929, Henry Stimson, the US secretary of state, disbanded the US military cryptology agency with the endearingly optimistic assertion that “gentlemen do not read each other’s mail”, a sentiment resoundingly rejected with the creation of the CIA in 1947 and the National Security Agency in 1952.
2. Example of the deep dissonance between economists and how the economy functions.
In a 2016 survey of academic economists, not a single respondent said putting tariffs on China to encourage domestic production would be a good idea.
This was even as Donald Trump was about to start his war on Chinese imports, which has now become the norm through a bipartisan consensus.
3. Microsoft and other Big Tech chasing Nvidia.
Nvidia is now planning to announce the launch of its serverless API, Nvidia Cloud Functions, at its GPU Technology Conference to be held in San Jose in March, The Ken has learnt. In other words, Nvidia’s GPU users will no longer have to go through a third party’s middle layer of software—such as Azure’s development environment—to access cloud functions... cloud-service providers like Azure and AWS who derive quite a bit of their revenues from providing this layer.
4. The amount of VC funding aimed at semiconductor chip design in India is a tiny fraction of the total technology sector funding.
5. Important anecdote about the intergenerational disparity facing current generation of workforce entrants.
His paycheque of Rs 2 lakh a month is much more than what his father earned back in the day in real terms (assuming 6% average inflation over the years). His father, a banker then, had managed to feed a family of six for over three decades, educate his children, buy two plots of land, and hold a grand wedding for his daughter... Every morning, 31 year old Rajeev Sinha gets ready by 8, packs his suitcase, and heads for his clinic at Patel Nagar, a popular locality, in an auto-rickshaw. Later in the day, Sinha, a gastroenterologist, attends a few patients at nearby hospitals. He packs up by 8 p.m., and takes an auto-rickshaw to the upmarket locality, Boring Road, where his father runs a clinic. They then drive back home in his father’s car. “My parents were 30 by the time they had me. We had a car, too, by then. My mother’s a homemaker; so the house ran on my father’s income,” Sinha told The Ken over a phone call. “Today, I don’t have liquid savings worth even Rs 10 lakh. My investments are also not enough to get married.”
This is a sobering reminder about the housing affordability crisis.
Typically, personal-finance experts advise not to pay more than 20% of one’s monthly income as EMIs... If Goyal were to go by that, he should’ve ideally restricted his EMI to Rs 40,000. That would mean a maximum loan of nearly Rs 55 lakh, assuming an 8.5% interest rate for 30 years. Add to it the Rs 20 lakh he has saved up for the downpayment and the cost of the property shouldn’t be more than Rs 75 lakh. Surprise, surprise. “Finding a new three-bedroom flat in Hyderabad for Rs 75 lakh is almost impossible,” said Govinda Bhul, a real-estate broker in the city. “Some projects in the outskirts may have [such properties] but only if the construction is yet to begin. Prices shoot up as construction progresses.” Forget buying a new house. Finding even second-hand apartments for that budget is a tough task, said Bhul who’s been in business for a decade...
Brokers across Mumbai, Gurugram, Delhi, and Noida would probably scoff at the idea of buying a three-bedroom flat for Rs 75 lakh. But just 10 years ago, one could find such properties in certain pockets of Mumbai, the country’s most expensive real-estate market. India’s nominal GDP has grown by 80% and nominal income by nearly 130% in the period since, but that hasn’t been enough to keep up with the real-estate run. Now, you can either live in expensive, high-rise societies or be relatively unsatisfied with your home “because you can’t afford what you really want,” said Jayati Ghosh, former economics professor at Delhi’s Jawaharlal Nehru University... the average residential rents in India’s top eight cities—Delhi NCR, Bengaluru, Mumbai metropolitan region, Hyderabad, Ahmedabad, Pune, Chennai, and Kolkata—have gone up by nearly 30% in the last two years... And Noida, Greater Noida, and Bengaluru have seen rents rise by over 40%.
So what's driving the price increases?
“With the entire ‘luxury’ tag, investors believe everything will be sold, no matter the price. So, when a project is announced, they buy it to eventually sell at higher prices,” said a senior executive at JLL India, a real-estate-services firm. “They believe that the top 1% will buy everything, and so, they don’t want to lower the prices.” Rising land and construction costs are equally to blame, it seems. The profit margin of a three-bedroom flat is nearly 30% more than that of a two-bedroom one, according to a Gurugram-based developer. “It keeps going up as the size [of the property] increases. So it makes business sense, too.”
6. Adam Tooze points to the spectacular surge in Big Tech capex.
7. Stunning graphic on the secular decline in US manufacturing employment from a paper by Michael Strain (HT: Adam Tooze).
8. Changes in the occupational structure of the US labour market over the last century and a half (HT: Adam Tooze)
9. The application of weight-loss drugs creates another market.
... many dermatologists report that patients are seeking out treatment for so-called “Ozempic face” in regions where there is a higher penetration of drugs using GLP-1s such as the Middle East and North America. “If they lose eight to 10 kilos or more, they start showing facial sagging,” said Ørnskov. “There, people will need to use a filler.” Galderma’s most popular filler for weight loss drug users is a product called Sculptra, which was initially developed for HIV patients who experienced rapid weight loss, he added. At its initial public offering in March last year, Galderma raised approximately SFr2.3bn ($2.7bn) at a price of SFr53 a share. Shares in the company have more than doubled to SFr108.50 a share. Galderma’s net sales grew 9.2 per cent to $3.2bn in the nine months to September 2024, driven by its two largest divisions, dermatological skincare — which includes everyday skincare brands like Cetaphil — and aesthetic injectables. Its third prescription treatment division, has lagged behind, with sales growing 2.9 per cent in the period.
10. Excellent article with very good suggestions to reform excise taxes on alcohol.
In most parts of the world, especially in the richer and more developed OECD countries, policy levers like excise tax rates and controls on availability and marketing are adjusted according to beverage type and strength, to promote the production and consumption of lower alcohol-strength beverages, which in turn helps reduce alcohol-related harm at the population level. Such differentiation has been used to regulate alcohol around the world for centuries, including in the UK since the 18th century, Denmark since 1918, the United States since 1933, and in all EFTA Members, and all EU Members. Alcoholic beverages contain alcohol and water in different proportions, but people buy an alcoholic beverage for the alcohol it contains and not the water. If the taxes are on the basis of value or volume of the beverage, then in effect the consumers are paying tax not only on alcohol but also on water which, in the case of beer, is 93-95 per cent of the liquid in the bottle. That surely does not make sense. The UK reformed its alcohol tax structure in 2023 to make it simpler and more economically rational. Under the new system, all categories are taxed based on alcohol strength, so the higher alcohol by volume (ABV) products pay more tax per unit of alcohol than lower ABV products...The state governments in India need to create clear daylight between excise policies for products with high alcohol content like liquor and that for milder options like wine and beer on taxation, availability and licensing. Taxation on an alcoholic beverage needs to be linked directly with the amount of alcohol it contains in as simple a manner as so many Rs per ml of actual alcohol content (Rs per ABV). Further, beer and wine licences should be liberalised to make these products far more easily accessible to consumers than hard liquor. To protect existing excise revenues, a good starting point would be a tax neutral position for liquor and then recasting of tax rates for wine and beer. This would deliver the ‘revenue positive substitution’ of harmful alcohol with less harmful alcoholic options, thus delivering both revenues and public health outcomes.
10. Content deluge in the media world
India now has over 900 channels, thousands of newspapers, and over 860 radio channels. We make more than 1,600 films in a normal year. Then streaming took off in 2018. The deluge became a flood. With more than 60 video streaming apps and a dozen music streaming ones, there is now an obscenely rich spread on tap... YouTube alone uploads 500 hours of video every minute.
And what does this mean and the challenge it poses?
One piece of research says that heavy screen users have an attention span of 8 seconds. That is less than that of a goldfish, which is famous for its 9-second attention span. How could you possibly tell any story or sell any product to this consumer?
11. Impressive numbers from Tata Electronics
Tata Electronics — which acquired Wistron’s iPhone facility in Narsapura, Karnataka, for $125 million in October 2023 — has significantly ramped up operations since mid-2024. The plant’s annual production soared to over Rs 40,000 crore during the January–December 2024 period — a 180 per cent surge compared to Rs 14,300 crore in the previous year. This performance positions the Tatas as responsible for 26 per cent of the total iPhone production in India, where Apple’s other vendors include Foxconn and Pegatron. During the year, Tata Electronics recorded a 63 per cent increase in direct employment at its iPhone assembly operations, with the workforce expanding to 31,000 from 19,000 in 2023. This growth elevated its factory to the position of India’s second-largest iPhone manufacturing facility in terms of direct job creation...
The factory now accounted for 17 per cent of the total direct employment generated across Apple’s iPhone ecosystem in India (185,000 workers as of 2024), which encompasses assemblers and component suppliers. By comparison, the largest factory, operated by Apple vendor Foxconn in Tamil Nadu, employed over 42,000 workers at its peak. Exports also surged, with over 77 per cent of the factory’s output shipped overseas in 2024. The export value for the year exceeded Rs 31,000 crore, up 125 per cent from Rs 13,751 crore in 2023. Tata’s contribution accounted for 29 per cent of India’s total iPhone exports in 2024... Of 31,000 workers directly employed by the Karnataka facility, 22,000 are women, most of whom are first-time job seekers aged 19–24. Over the past four years, the factory has consistently expanded its employee base; the previous year, it was in the 17,000–19,000 range.
12. Ruchir Sharma spots an important difference between politics in the developed and developing countries.
Last year, incumbent parties lost 85 per cent of the elections in developed countries, up from 25 per cent on average in the early 2000s. In developing countries, the mood shifted the other way. Incumbents lost around 25 per cent of the elections in 2024, down from 50 per cent in the early 2000s. Opinion polls tell the same story: the share of respondents who approve of their leader has fallen to near 30 per cent in developed countries, while holding steady above 50 per cent in developing countries.
There are important departures in areas like inflation, immigration, inequality etc., between the two parts of the world.
By 2024 in the US the price of eggs, for example, was still 200 per cent higher than before the pandemic — compared with about 50 per cent higher in India and Indonesia. Even after adjusting for that broader surge in inflation, home prices were up 17 per cent in developed countries, versus just 3 per cent in developing ones, which helps explain why unaffordable housing is stoking strong anti-incumbent sentiment in the US and UK. Meanwhile, the surge in immigration had become a burning election issue in the west but not in developing countries, which are largely departure points rather than destinations for immigrants... Since 1980, the income share of the top 1 per cent has more than doubled in the US to 21 per cent, while inching up just 3 points to 18 per cent on average in the major developing economies. Most strikingly, Mexico is one of the few countries where the income share of the 1 per cent is falling... only about 20 per cent of Americans express trust in government, down from a peak above 70 per cent in the 1960s. In developing nations, trust is ticking up on average, lifted in the past decade by huge gains in nations where incumbents won last year. Nearly 50 per cent of Mexicans and over 70 per cent of Indians and Indonesians now express trust in their government.
13. Strongman leader, President Nayib Bukele of El Salvador. Now on his second five year tenure after a landslide win, he's among the most popular leaders in the world after almost eliminating violent crime, investing heavily in infrastructure, and generally boosting economic growth by promoting the likes of surfing tourism. These successes appear to have come at a cost, with 107,000 Salvadoreans among a population of just 6.3 million being in prisons. His support for bitcoins, which the country adopted as legal tender and made part of reserves in 2021, has made him a darling for western conservatives who see El Salvador as a model for emulation.
14. Is India's tech sector undergoing a revival?
Morning rush-hour speed from New Jersey through the Holland Tunnel, a main route under the Hudson River into Manhattan, has almost doubled to 28mph compared with a year earlier. Evening speed over the Manhattan Bridge to Brooklyn has increased from 13mph to 23mph... Most passenger cars entering the zone now pay a $9 toll, while trucks pay $14.40 and motorcycles, $4.50. Some autos, including emergency vehicles, are exempt. The scheme means New York joins London, Milan, Singapore and Stockholm in a small club of big cities with congestion pricing. Traffic in London, which introduced its programme in 2003, dropped by 14 per cent in its zone in the first year. Other cities experienced drops of more than 20 per cent... Of eight bridges and tunnels examined, seven experienced significant acceleration in at least one rush hour. Three bridges into Manhattan that are not connected to the congestion zone did not experience similar speed increases.
This is an interesting behavioural response.
Lewis Lehe, an assistant professor of civil engineering at the University of Illinois Urbana-Champaign, has found that drivers in other cities with congestion pricing respond more dramatically to the introduction of a toll than to later price increases — an idea he refers to as “large elasticity at introduction”.
Congestion pricing has already triggered market responses, nowhere more striking than in the restaurant industry which is one of Manhattan's great attractions.
Jae Jung, the owner of Kjun in Murray Hill, said Friday that her produce, meat and fish vendors had announced new surcharges on each delivery. Because her restaurant is small and has limited storage space, she said, she receives deliveries three or four times a week, and will try to consolidate those into one or two... Several restaurateurs have jumped at the chance to appease and attract customers, offering rebates and discounts. Le Jardin Bistro, on the Lower East Side, Mr. Mehta’s restaurants and the Sushi by Bou omakase chain are offering a $9 discount on each check to customers who have paid the driving charge.
No comments:
Post a Comment