Weekend reading links

1. Crony capitalism in America.

The Saudi Crown Prince Mohammed bin Salman, for example, is engaging in sensitive national security conversations with President Donald Trump, even as the Trump family real estate business is in talks with the Saudis about a big construction project. Trump’s artificial intelligence and crypto tsar, David Sacks, has hundreds of tech investments poised to benefit from policies Trump is pushing... While the Trump family’s tentacles have worked their way into many industries, from finance and technology to real estate and defence, digital assets are perhaps the most obvious place to look for conflicts of interest that could infect the larger economy. Consider one complicated example involving the stablecoin of the Trump family crypto venture World Liberty Financial, which was used by Abu Dhabi’s MGX in a $2bn transaction linked to Binance. That company was co-founded by Changpeng Zhao, who received a presidential pardon in late October, after previously pleading guilty to a criminal charge relating to lax money laundering controls. Then there are Trump supporters like the Winklevoss brothers, whose Gemini platform was charged with the unregistered sale of assets during the Biden administration, only to settle with the Securities and Exchange Commission this year. The Winklevoss twins are big Republican donors (they’ve even chipped in for the construction of a new White House ballroom) and, not surprisingly, their platform is embedding itself deeper and more quickly into the US crypto infrastructure than many competitors. This autumn, Gemini announced a Nasdaq partnership.

2. As President Trump fights a weak economy, the largest share of Americans in more than 50 years is saying that the government is mishandling the economy. 

The signature economic achievement of Trump 2.0, the One Big Beautiful Bill, is contributing to the emerging K-shaped economic growth trends. 

3. America's K-shaped economy in a graph showing the divergence between the S&P 500 and the University of Michigan Consumer Survey trends. (HT: Adam Tooze)

A K shaped economy describes a post-crisis recovery where different parts of the economy and society are performing at sharply diverging rates, forming the two arms of the letter “K.”:

• The upper arm (going up): Sectors, companies, assets, and people that benefit from the recovery and, in many cases, are wealthier than before the pandemic. This includes investors in technology stocks, big tech companies, the luxury sectors, high-income professionals, and asset owners.
• The lower arm (going down): Sectors, small businesses, and people that continue to decline or stagnate even as the overall economy appears to improve. Examples include: the hospitality and travel industries, many lower-priced retail outlets, low-wage service workers, small businesses, and many middle-class and lower-income households.

4. China's trade surplus hits $1 trillion in just 11 months.

 

5. Important point about the Indigo fiasco.

In operational terms, the new flight duty time limitation (FDTL) rules were the most consequential development for any domestic airline heading into 2025. Yet, as The Indian Express has reported, the airline’s Annual Reports for 2023-24 and 2024-25 did not mention the new rules at all, nor did they figure in the airline’s Risk Management Report. This implies that the airline’s management did not anticipate operational challenges arising from these new rules and did not prepare for them adequately, which raises questions about its basic executive capabilities.

6. Indian equity market facts

India has been the worst-performing major equity market in the world. Flat in US dollar (USD) terms, we have been left behind by global emerging-market (EM) indices, which are up 29 per cent in USD as of end-November 2025. This is the worst relative performance for India since 1993. India has now dropped to third place in terms of EM weighting and is just about half the weight of China... India has also been shunned by foreigners, with foreign portfolio investors (FPIs) selling over $18 billion in 2025 year-to-date, marking five years of zero flows. The saving grace has been domestic flows, which continue to power ahead, with $80 billion invested by domestic institutional investors to date and the number of investors crossing 135 million... Despite 15 months of no returns, mutual fund retail flows continue to track about $3 billion per month.

7. Mexico imposes tariffs of up to 50% on about 1400 goods imported from China and other Asian countries with which Mexico has no trade deal. Chinese cars will be the hardest hit. Mexican imports from China have ballooned by 75% since 2020 to $130 bn in 2024. 

8. Oren Cass writes that the Trump administration's greatest challenge is Trump himself.

Is China an adversary or a partner? Sometimes, US policy prohibits the sale of AI chips to China and pushes allies to keep China out of their markets. Other times, Trump promotes the sale of more powerful chips, or muses about Chinese firms setting up shop stateside. Are cheap foreign workers good for the US economy or bad? Sometimes the administration is forcing them out, other times trying to bring more in. Trump’s repeated suggestion to admit 600,000 Chinese students to the same US higher education system he has attacked is a particular head-scratcher. Is industrial policy to rebuild critical domestic production capacity wise? Sometimes the president trashes the Chips Act, other times he celebrates its results and goes even further in his market interventions.

This graphic shows how all the bluster on China, its exports are now on similar tariff lines compared with those from other countries (HT: Adam Tooze). 

9. Striking graphic that is a pointer to why the US leads globally in innovation (HT: Adam Tooze)

10. Important example of how preemptive anti-trust actions have valuable innovation effects.

When Nvidia attempted to acquire Arm in 2020 — a deal that would have locked down the fundamental architecture of chips used for AI — the FTC sued to block it and the deal was abandoned. Because Arm remained independent, Google is now able to compete with Nvidia in the production of AI chips, using Arm’s technology to build its own processors.

11. Electrification in South Asia is a true development success to be celebrated, just as its failure in Africa is one to be deeply disturbed. 

12. Sobering tale of how BP and Shell terribly misread their industry trajectory and ended up betting prematurely on renewables. Both owed their positions to leadership, Bernard Looney and Ben Van Burden. The article charts how the former, assisted by McKinsey, forced through changes at BP.

The green revolution at BP began on February 12 2020, in Bernard Looney’s second week as chief executive. Looney, a charismatic BP lifer who had run the company’s oil and gas operations, embraced the energy transition with the zeal of a convert... Two former executives claim Looney had been working with consultants from McKinsey for months but had not shared the plan with the other 11 members of BP’s executive team before unveiling it. “It was a big bang approach,” one of them says... 

To consolidate control and prepare BP for disruption, Looney and McKinsey dismantled the company’s traditional “upstream” and “downstream” divisions, which explored and produced oil and gas and then refined, traded and sold it. Instead, there were 11 new business units, some of which left staff baffled. One new team was called “Cities and Regions” and its job was to imagine how urbanisation would change energy use and consult with cities on what opportunities there might be for BP to play a role. “It looked like a consulting job on a piece of paper rather than something that was really going to fly,” admits one former BP executive. Last year, BP reorganised again to get rid of the Cities and Regions unit and “reduce duplication”.

“You could see the mis-steps happening live. The degrees of change were just too fast,” says another. “Changing the CEO is one degree of change. Then the CEO changes the strategy overnight. Then he decimates anybody in divisions that he didn’t think were important.” Later in 2020, Looney set out more details. BP went beyond Shell, and any other oil company, in pledging to actually reduce the oil and gas it produced, with an initial target of a 40 per cent cut by 2030. “No other company followed, so either you are a prophet and others did not get it, or you are the lonely guy on top of a mountain,” observes the second executive. With McKinsey teams embedded across the organisation to offer rebuttals, and amid the chaos of the reorganisation, insiders say it was hard to speak out against the plan. “You could not have a dialogue about this being the wrong thing. If the numbers did not work, you would fit them,” the executive adds.

This is the reversal

Both companies increased their spending on green technology rapidly, to a peak in 2022 of nearly a third of overall investment, or $4.9bn, for BP, and nearly a fifth, or $4.3bn, for Shell. BP promised to spend a further $55bn to $65bn between 2023 and 2030... Today, Shell and BP have retreated to be more in line with their US rivals, though still with targets to have net zero emissions by 2050. The grand narrative of transformation has been discarded for renewed focus on shareholder returns. While the world continues to electrify, and to grow the share of solar and wind power generation, the two companies are now focusing on other parts of the transition, such as moving from heavy fuels with high emissions to gas and eventually biofuels and hydrogen. In the first nine months of this year, BP cut its spending on clean energy by 80 per cent compared with last year, to just $332mn. Shell says it is now “focused on disciplined capital allocation in our areas of competitive strength while driving improved returns”.

Graphical summary of China's rising trade surplus

1. Notwithstanding all the trade restrictions, China’s trade surplus continues to surge unabated, topping $ 1 trillion in just 11 months. It reached $1.08 trillion by November, with exports surpassing another record of $3.41 trillion. 

2. This is part of a post-pandemic trend of rising exports and declining imports, which has accelerated since 2023.

3. The prices of Chinese exports have declined since the beginning of 2023, driven by excess capacity accumulated and price wars, thereby driving export competitiveness and boosting exports. Stagnant domestic demand has further redirected production towards exports while also keeping imports down. 

4. Another signature of the export focus comes from the trends in sectors with under-performing domestic sales. In these sectors, exports have surged manifold since the pandemic. 

The ECB report from which the above graphics are taken writes, 

Excess capacity has led firms into price wars. This has eroded profit margins and discouraged spending in a deflationary environment with significant labour slack – prompting firms to redirect sales toward foreign markets. This shift reflects the “vent-for-surplus” theory of international trade, which posits that a demand-driven decline in domestic sales generates excess capacity that can be redirected abroad… To expand abroad, firms must gain competitiveness in foreign markets. They typically do so by reducing short-run marginal costs and prices, or by accepting narrower profit margins, and in some cases even losses. The “vent-for-surplus” theory helps explain recent trade patterns…

Since 2022 export volumes in sectors such as motor vehicles and steel have risen by about 75%, suggesting that firms have increasingly shifted sales to foreign markets. Domestic absorption of excess capacity through lower prices has been constrained by weak demand, as the housing downturn continues to weigh on consumer confidence. By contrast, in sectors with outperforming domestic sales growth, mainly related to technology goods, export volumes have largely moved in line with domestic sales, rising by about 30% since 2022. 

5. In general, the Chinese economy has been in a deflationary environment, with producer prices falling for 38 months now. 

6. While exports to the US have been declining, those to the rest of the world (RoW) have been rising. 

7. The Trump 2.0 restrictions appear to be especially effective across the board.

8. The decline in exports to the US has been more than offset by the rise in exports to RoW. 

It is most likely that there’s some re-routing of exports to the US through third countries, as evidenced by, for example, the surge in exports to Vietnam and Hong Kong. The extent of such rerouting remains to be seen. Further, in September, Thailand’s exports to the United States rose by 33 percent, Taiwan’s grew by 51 percent, and Singapore’s by 13 percent.

9. EVs, batteries, and solar panels are the major items where there has been a surge in Chinese exports between July and September this year compared with the same period last year, as reported in the China Customs data. 

10. The Chinese dominance is not limited to these frontier industries. It covers lower-value-added sectors, where other countries might be considered to have a comparative advantage. 

This surge in Chinese exports in these industries is likely to erode the fledgling manufacturing bases in these countries. It would also deprive them of any potential manufacturing opportunities arising from China's move up the value chain and vacating lower-value-added industries.

11. More evidence of the rerouting of exports to the US comes from trends in exports to Southeast Asia. The surplus with the region rose from $191 bn in all of 2024 to $245 bn in the first 11 months of 2025, pointing to likely trans-shipment. Similarly, China’s 11-month surplus with Africa is up $27bn over the full-year 2024 figures. 

12. Nothing symbolises the surge in Chinese exports in recent years more than cars, where China’s dominance of EV manufacturing has driven a $64 bn trade surplus in the first 10 months. 

The summary. Thanks to generous economy-wide subsidies, aggressive industrial policy, and intense competition between local governments, China has built up excessive domestic manufacturing capacities across sectors, which, coupled with weak domestic demand and the absence of meaningful domestic demand stimulation, leaves firms with no outlet other than exports. And the intense competition among firms has led to price wars and dumping in external markets. The result is a rise in geopolitical tensions and intensification of trade wars, and destruction of manufacturing bases in developing countries. 

Thoughts on affordable housing XIII

This is the latest in the series on affordable housing. Affordable housing supply is arguably one of the top policy challenges facing cities across the world. 

This graphic by John Burn-Murdoch is a good illustration. 

Here’s more evidence.

Home prices have risen more than 50 percent since the pandemic. About a third of Americans households now spend more than 30 percent of their income on housing. In 2014, the median age of a first-time home buyer was 31. In 2025, it was 40 — the highest on record.

Burn-Murdoch also points to research that links some of the commonly observed GenZ behaviours (like not making an effort or splurging on luxuries) to the housing affordability problem. 

In a pioneering study published last week, economists at the University of Chicago and Northwestern University used detailed data on the card transactions, wealth and attitudes of Americans to demonstrate that reduced work effort, increased leisure spending and investment in risky financial assets (including crypto) are all disproportionately common among young adults who face little to no realistic prospect of being able to afford a house. By contrast, Seung Hyeong Lee and Younggeun Yoo’s research finds that those for whom home ownership is a more realistic possibility in the medium term, or who have already attained it, take fewer risks and strive harder at work. 

I have extended their analysis to the UK and find a similar picture. Young British renters who have little hope of cobbling together a deposit are much more likely to take financial risks — with online betting, for example — than their contemporaries who are on or within reach of the housing ladder… Lee and Yoo use time series data and local house prices to show that the link between unaffordable housing and economic behaviour appears to be causal. Recent upticks in financial risk-taking, leisure spending and reduction in work effort respond to changing economic incentives. As housing affordability deteriorates, those who come to believe they are locked out of home ownership resort to a mixture of high-risk bets and what US economic commentator Demetri Kofinas calls “financial nihilism” — why strive and save when it won’t be enough to make it anyway? — while their better-placed counterparts tighten their belts.

Fundamentally, as Ezra Klein points out with this graphic, the housing affordability problem is a housing supply problem. 

In 2025, America built fewer homes per 100,000 people than it did in 2005, 1995, 1985 or 1975.

Housing supply in the US has slipped into the negative territory since 2017. 

Governments in cities across the world have been exploring various approaches to address the housing affordability crisis. I have blogged about several of them in my earlier posts on the issue. 

The report by the Centre for American Progress, linked in the above article, offers a three-pronged plan: take down barriers that make it harder to build homes; build more affordable homes at a lower cost; and protect consumers and lower other housing costs. It seeks to address the problem of opposition to house-building in high-cost/rent areas by paying people living in such areas if their areas build more housing. Klein writes,

Places with a housing shortage — and that’s a lot of them — get a choice. Build the housing and the federal government will give all the renters in the city up to $1,000 off their rent — or don’t build the housing and lose access to certain federal grants. The Searchlight Institute, a new Democratic think tank, recently proposed a similar idea. In that version, cities and other places that hit ambitious housing targets would qualify for a federal rebate that would give every household — so both homeowners and renters — a check equal to the average increase in rent over the last year. In other words, build enough housing and the federal government will give the people who live near that housing money…

The other proposal is to lower housing construction cost

Between 1950 and 2020, productivity in the manufacturing sector — how much you could produce with the same number of workers — rose by more than 900 percent. That’s a big part of why everything from tables to televisions are cheaper today than they were decades ago. But over the same period, productivity in the construction sector has fallen… But you can manufacture housing — constructing homes in an off-site factory much the way we construct cars and then shipping them for final assembly. This is technology pioneered in the United States when George Romney, Mitt Romney’s father, served as secretary of housing and urban development during the Nixon administration. But the United States never figured out the rules nor the financing to make an industry out of it. Instead, it’s taken hold elsewhere. In Sweden, for example, more than 40 percent of new homes — and more than 80 percent of single-family homes — are fabricated off-site.

The Center for American Progress’s plan proposes a slew of projects to take this industry America invented and make it one where America is a leader. They want the government to seed a major research program to fund innovation in housing construction. They want to have the federal government leverage its purchasing power to become an initial buyer for modular housing — one idea here would be to have the Department of Defense upgrade its military base housing using modular construction. They want to modernize building codes to make modular easier — removing, for instance, an outdated federal requirement to attach a permanent steel chassis to all modular construction — and updating federal insurance and financing rules to make sure modular production qualifies.

A longstanding problem with urban planning in the US and the UK is the discretion allowed to local communities and planners in planning decisions. This has spawned NIBYism trends in the guise of conditions spanning environmental protection, preservation of historical areas, energy efficiency considerations, etc. Sample this illustration from the UK by Sam Dumitriu. 

A fourteen-flat development in Walthamstow, less than 10 minutes walk from the Victoria Line, required a 1,250 page planning application. Its developers produced more than 70 separate documents and still have waited over a year for a decision from the local authority. This isn’t just a Walthamstow problem either. One SME housebuilder recently revealed that Croydon required them to produce over forty separate validation documents to get planning permission. In the PM’s backyard, Camden, a major brownfield development was delayed because planners were not satisfied that the project was ‘exemplary’ in terms of ‘the circular economy and whole life carbon impacts’. In Cambridge, one of the most unaffordable parts of Britain, all new developments (10 units or more) must spend at least 1 per cent of their capital costs on public art.

The UK, under the Labour government, has been exploring various policy proposals to ease zoning regulations and promote densification to increase housing supply. The Chancellor Rachel Reeves has announced the Brownfield Passport, which would make “yes” the default answer for new denser housing on previously developed land. However, its success would depend on the details of implementation. Dumitriu writes that the Levelling Up and Regeneration Act (LURA) contains the power to create National Development Management Policies (NDMPs), which could declare basic standards for embedded carbon, flood protection, access to light, etc., to supersede any local planning policies. However, its effectiveness could be blunted by the non-binding nature of NDMPs. Another proposal by the Labour Government is the New Towns policy to develop new greenfield towns. 

California has been experiencing a serious housing affordability crisis, largely due to restrictive housing development norms like this.

Land is expensive, labor is expensive and NIMBYism — the not-in-my-backyard sentiment that exists everywhere — is particularly strong. The city’s zoning rules discourage projects that are tall and bulky and that might anger the owners of single-family houses nearby. Five stories is the tallest allowable height for a multifamily residential building — and those are permitted on only a few blocks of the city.

In early October, California took a major step to address this problem when the state legislature approved Senate Bill 79 (SB79) that overrides local zoning laws to promote transit-oriented development through higher-density housing. It allows developers to build up to nine storeys high within a half-mile of major public transit stops. The law would be phased in gradually, taking full effect by the start of 2030. 

In brief, the law would prevent local communities from blocking new mid-rise housing in well-connected locations under the cover of community review, environmental safeguards, etc. It expedites approvals by imposing strict timelines and penalties on the cities for non-compliance with its provisions. This is a good primer. 

California is emulating reforms that have been undertaken far away in New Zealand. The country has emerged as a pioneer in urban planning reform. In 2016, the city of Auckland upzoned three-quarters of its residential land through the Auckland Unitary Plan to allow dense development near transport by-right, which kept rents 30% lower than the counterfactual. The reform was rolled out nationwide, and New Zealand has seen a construction boom. The new Housing Minister, Chris Bishop, is taking the policy even further and removing anti-supply red tape.

Weekend reading links

1. Toronto's pedestrian tunnel system, The Path, that emerged in response to congestion in the main streets.

In the early twentieth century, Toronto’s businesses developed a novel response to this. They began to create pedestrian tunnels from their offices to the metro stations so that their employees could flow in smoothly, avoiding the congested streets (and, in winter, the cold). Shops quickly started to be added. After a few businesses had done this, a ‘network effect’ emerged whereby other businesses started to add their own tunnels to the system, benefiting from the existing tunnels while also making them more useful. It became routine for downtown developers to tie new office blocks into the network. Over many decades, a sort of ‘pedestrian metro’ emerged.

Known as the Path, the network today stretches for more than 30 kilometers, linking nearly all central metro and railway stations with many of the major office buildings. Although the Path forms a unified network, it is not in unified ownership: it is divided into some 35 chunks, each of which is still owned and managed separately by descendants of whichever business originally contributed it. Many branches of the Path thus terminate in the lobbies of office buildings, with the curious result that these grand spaces function as metro entrances for the general public. The municipal authorities play only a limited regulatory role.

The Path is unlike the gloomy and malodorous underpasses with which most of us are familiar. It is expensively decorated and feels like a high-end shopping mall, which in a way it is. It is extremely clean and closely policed by dozens of private security teams. Until recently, it was thronged with shoppers: this use suffered in the pandemic and has not wholly recovered, but the Path is still used for its original commuting purpose by hundreds of thousands of people every weekday.

2. Nvidia has a new rival for its GPU chips, Google's tensor processing units (TPUs), which it used to train its latest Gemini 3 LLM. 

Nvidia’s customers have a big incentive to explore cheaper alternatives. Bernstein, an investment-research firm, estimates that Nvidia’s GPUs account for over two-thirds of the cost of a typical AI server rack. Google’s TPUs cost between a half and a tenth as much as an equivalent Nvidia chip. Those savings matter, given the vast sums currently being poured into computing power for AI. Bloomberg Intelligence, another research group, expects Google’s capital expenditures to hit $95bn next year, with nearly three-quarters of that being used to train and run AI models.

But Nvidia's moat is unlikely to disappear.

For Nvidia’s other customers, however, switching to Google’s chips will not be straightforward. Nvidia’s edge lies partly in CUDA, the software platform that helps programmers make use of its GPUs. AI developers have become accustomed to it. And whereas the software surrounding TPUs has been created with Google’s own products in mind, including search, CUDA is intended to cater to a wide range of applications. What is more, reckons Jay Goldberg of Seaport Research Partners, an industry analyst, there may be a limit to Google’s willingness to sell its TPU; it could prefer instead to steer prospective customers towards its lucrative cloud-computing service. To stymie its AI competitors, Google may also be tempted to keep prices for its chips high.

3. AI adoption is stalling, so says a survey by statisticians at the US Census Bureau. It finds that the employement-weighted share of Americans using AI at work has fallen by a percentage point to 11%, and has fallen sharply at the largest businesses. 

The article has this description of the challenge facing the AI market.

From today until 2030 big tech firms will spend $5trn on infrastructure to supply AI services. To make those investments worthwhile, they will need on the order of $650bn a year in AI revenues, according to JPMorgan Chase, a bank, up from about $50bn a year today. People paying for AI in their personal lives will probably buy only a fraction of what is ultimately required. Businesses must do the rest... Jon Hartley of Stanford University and colleagues found that in September 37% of Americans used generative ai at work, down from 46% in June. A tracker by Alex Bick of the Federal Reserve Bank of St Louis and colleagues revealed that, in August 2024, 12.1% of working-age adults used generative AI every day at work. A year later 12.6% did. Ramp, a fintech firm, finds that in early 2025 AI use soared at American firms to 40%, before levelling off. The growth in adoption really does seem to be slowing...

According to a poll of executives by Deloitte, a consultancy, and the Centre for AI, Management and Organisation at Hong Kong University, 45% reported returns from AI initiatives that were below their expectations. Only 10% reported their expectations being exceeded. A study by McKinsey, another consultancy, argued that for most organisations, the use of aihas not yet significantly affected enterprise-wide profits... A paper by Yvonne Chen of ShanghaiTech University and colleagues refers to “genAI's mediocrity trap”. With the assistance of the tech, people can produce something “good enough”. This helps weaker workers. But the paper finds it can harm the productivity of better ones, who decide to work less hard.

4. India has caught up with China in education imports from the US (or students travelling to the US to study there). India's exports have doubled in just three years.

And India's share of US exports has now caught up with China. 

5. Striking statistic about private credit and insurance.

Close to 37 per cent of North American life insurance investments are allocated to private credit. But private credit encompasses a world of different types of lending — from private placements and commercial real estate lending to asset-based finance and fund finance — in which they have long-standing expertise.

Banks are also big lenders to private credit firms. 

6. Comparing AI investments with those in railways in the 19th century.

The railways, for example, were considered similarly transformative in the 19th century... As a percentage of investment in the United Kingdom, the world’s economic behemoth in the mid-Victorian period, domestic railways accounted for perhaps half. This was at the peak of the mania, in the 1840s. But even over the longer term, railway investment accounted for around a fifth of total investment over the four decades after George IV died in 1830. Around the turn of the century, railway bonds and shares accounted for between a quarter and a third of household financial portfolios in Britain. In the United States, during various railway-building booms (the 1840s, the 1870s), investment in the sector accounted for 40 per cent of total investment in the economy. At some points, it accounted for almost 10 per cent of gross domestic product (GDP)... AI investment may have accounted for all of US GDP growth in the first half of this year, but that still means only a couple of percentage points of GDP, as compared to the 6-10 per cent that was routinely achieved during railway booms.

7. Indian equity market facts

The MSCI India index has returned 2.5 per cent in dollar terms this year compared with 27.7 per cent for the MSCI Emerging Markets index, India’s weakest relative performance since 1993. Foreign investors have pulled more than $16bn out of India this year, the second-largest drawdown on record

Real interest rates have risen.

8. Indian economy update

9. Rising interest rates in Japan are bringing to an end decades of the yen carry trade which allowed western markets to benefit from Japan's savings. 

10. African electricity facts.

To get a sense of how little electricity people use in sub-Saharan Africa, imagine each person there turning on a single 50-watt light bulb. That alone would instantly double electricity consumption. Nigeria, with 240m people, generates less electricity than the American state of Wyoming, which has 0.6m inhabitants. Uganda, with 50m people, produces less than Latvia, which has a population of 1.9m. Around 600m Africans have no electricity at all.

11. A good summary of the Indigo fiasco that is now playing out in India.

The story begins with pilot associations filing petitions in the Delhi High Court around 2019-20, pushing for stricter rules regarding pilot fatigue. The High Court repeatedly questioned India’s Directorate General of Civil Aviation about updating its rules on pilot fatigue and, in response, the DGCA unleashed the Flight Duty Time Limitations (FDTL) rules... FDTL is a set of safety regulations that determines how long a pilot can work, how much rest they must get, and how many night flights they can operate... These rules were notified in January 2024 and were to come into full effect on November 1, 2025. IndiGo has now admitted that it did not plan adequately for these changes and thus faced pilot and crew shortages, which have led to this mayhem.

This is an important aspect about what happens when a dominant market player defaults in an infrastructure sector. 

In advanced economies, the repercussions would be through the markets and the courts. The markets are the first recourse – customers would punish the airline by choosing alternatives, and the company would have to go out of its way to win back market share. The problem, however, is the lack of alternatives in India, which was one of the main causes of such a scenario in the first place. IndiGo commands about 65 per cent of the market share, which translates to roughly two out of every three domestic flyers in India being on IndiGo on an average day, with the rest of the industry effectively competing for the remaining third. This enormous market power means that customers, despite themselves, might have to choose IndiGo again for their travel needs due to the lack of options.