Weekend reading links

1. Some interesting trade tariffs data

India’s average tariff is 17 per cent higher than the US’ at 3.3 per cent, but similar to countries like South Korea (13.4 per cent) and China (7.5 per cent). India’s average tariff for industrial products is lower at 13.5 per cent, with a trade-weighted average of 9 per cent... India does impose high tariffs on products like whiskey (150 per cent) and automobiles (100-125 per cent), many countries use high tariffs to protect specific industries, so India is not alone in this practice... Here are the highest tariffs imposed by the US on various product groups: Dairy products (188 per cent), fruit and vegetables (132 per cent), cereals and food preparations (193 per cent), oilseeds, fats, and oils (164 per cent), beverages and tobacco (150 per cent), minerals and metals (187 per cent), Clothing (135 per cent)... Japan’s highest tariff is 457 per cent, South Korea’s is 887 per cent, and the US’ is 350 per cent, compared to India’s is 150 per cent. The highest tariffs are often applied to protect sensitive sectors...

When the WTO started in 1995, countries set maximum tariffs on products, called “bound tariffs,” which they agreed not to exceed. Developed countries like the US and Japan set low bound tariffs (around 3-4 per cent), while developing countries like India were allowed higher tariffs (40-150 per cent). Developed countries allowed this flexibility in exchange for developing countries agreeing to include issues like intellectual property rights and services in WTO discussions. Because of these low-bound tariffs, the US cannot raise tariffs without breaking WTO rules. In contrast, India can raise tariffs on steel from 10 per cent to 20 per cent without violating WTO rules since its bound tariff on steel is 40 per cent. The gap between a country’s bound and actual tariff is called “water”. Countries like the US, Japan, and China have low “water”, while India has high “water”, meaning India has more flexibility to raise tariffs without breaking WTO rules.

2. Africa fact of the day

142 years after Thomas Edison’s invention, 43 per cent of Africans still lack access to electricity... Ninety-five per cent of pregnant women in Africa have no access to scanning.

3. India power generation facts of the day

During 2017-22, capacity addition achieved from conventional sources stood at 30.6 Gw while that from RE sources, including hydropower, was much larger at 54.7 Gw during the same period... India, however, will remain coal-dependent for the foreseeable future. In fact, the country saw the share of coal-fired power generation rise to 75 per cent in 2023-24, from 71 per cent in 2019-20.

4. Important reason why the Republican right supports Donald Trump despite his unlikeability. 

One day each month, Charlie Kirk, one of the country’s most influential Republican activists, holds an event called Freedom Night in America at Dream City Church, a Pentecostal megachurch on the outskirts of Phoenix... he made a subtler point, stressing that it’s not actually Trump whom conservatives are voting for but the 5,000 political appointees he’ll sweep into office behind him. “Those 5,000 people matter a lot more than whether or not, well, ‘I don’t like Trump because he’s not very nice,’” said Kirk. 

In this citadel of MAGA spirituality — the ex-president himself spoke there at a Turning Point event in June — I’d expected to hear Trump praised in exalted terms, not justified as the lesser of two evils. But Carson argued that, unless Jesus Christ himself is on the ballot, the lesser evil is the choice in every election. “There are certain individuals that some people just detest because they don’t like their tweets and things like that,” said Carson. He asked, “But do you hate that person more than you love your children and your grandchildren?”... Turning Point, which moved its headquarters to Phoenix in 2018, is fully committed to the notion that Biden’s victory was illegitimate, and it’s been effective in enforcing ideological discipline in Arizona. “They have a bigger impact than any other Republican group I know,” the Trump operative Jeff DeWit told The Washington Post in 2022, describing Turning Point as more powerful than the Republican National Committee.

5. On a related note, from Europe, Simon Kuper has some important insights about the rise of far-right parties. He points to historical shadows.

The voting map of the German far-right party Alternative für Deutschland has a ghostly shadow. It looks like the map of Nazi electoral heartlands from 1928 through to March 1933. Both parties relied on voters in historically Lutheran areas of eastern Germany, such as Brandenburg, the Erzgebirge mountains and eastern Saxony... Davide Cantoni, a professor of economic history at Ludwig-Maximilians-Universität München... classed historical support for the far right as carrying “similar importance” to other drivers of support for the AfD such as unemployment, loss of well-paid jobs in industry and uncertainty because of migration. There are echoes of the 1930s in many far-right movements that are now in government or hope to be soon, from Giorgia Meloni’s Fratelli d’Italia to Austria’s FPÖ and Donald Trump’s Maga in the US... Today’s far right isn’t planning death camps. It merely wants to create more ethnically homogenous societies through non-fatal deportations, as in the FPÖ’s promise of “remigration”...

In Italy in 1946, writes political scientist Marco Tarchi, “the birth of the Movimento sociale italiano [MSI] offered a home to those tens of thousands of ex-servicemen who had been on the ‘wrong side’”. Meloni’s Fratelli d’Italia descends partly from the MSI. Austria’s FPÖ was founded in 1955, led by former SS Brigade Leader Anton Reinthaller. A subsequent FPÖ leader, Friedrich Peter, had served in an SS division that murdered thousands of Jews. France’s far-right Front National was co-founded in 1972 by Jean-Marie Le Pen and Pierre Bousquet, another Waffen-SS veteran. In the coalition that makes up a typical 21st-century far-right party, there are other overlapping strands that are probably larger than voters with roots in the fascism of the 1930s. These include economically disappointed people, Islamophobes, men afraid of feminism and anti-vaxxers. Still, nostalgic fascists are often among the most committed supporters...

Parties traditionally fear deterring swing voters by letting their fascist roots show. And so Meloni, who as a teenaged activist said of Mussolini that “everything he did, he did for Italy”, now denies this heritage. France’s far-right leader Marine Le Pen has tried to erase her party’s origins by silencing antisemitism. The party expelled her father for his provocations about the Holocaust. To the daughter, the alien enemy that is now polluting France is Islam.

6. If leading Republican lawmakers in the US are to be believed, McKinsey might have violated federal law by failing to disclose potential conflicts of interest between its work in China and for the Pentagon. The firm has won almost half a billion dollars of business from the US Department of Defense since 2008. 

“Based on a review of a subset of DoD documents available to the select committee, it appears that McKinsey failed to disclose any potential conflicts of interest,” according to the letter, which was signed by committee chair John Moolenaar and senators Marco Rubio and Joni Ernst. The lawmakers said McKinsey’s work for Chinese state-owned enterprises including China Communications Construction Company — which has been blacklisted by the US Department of Commerce for helping Beijing build military bases in the South China Sea — represented at least a potential conflict of interest that should have been disclosed, along with details of how McKinsey mitigated any conflict... The lawmakers’ letter also reopens a question over the testimony that McKinsey’s global managing partner Bob Sternfels gave to Congress this year, when he said the firm had never had the Chinese central government as a client.

7. John Burn-Murdoch points to new research by Reilly Steel, a political scientist at New York’s Columbia Law School which finds "that the political views of America’s corporate elite have shifted significantly to the left in the past two decades, and that this change in managerial class values has driven the recent wave of corporate social activism".

Using data on millions of political donations made by tens of thousands of executives, board members and senior managers since 2001, Steel finds that the median US CEO is no longer solidly on the right. Instead, he or she is now a political moderate, while senior managers today are overwhelmingly left-leaning... Both Steel and a separate team of US finance professors find that the share of companies with overwhelmingly left-leaning or right-leaning leadership teams is rising, leading to increased rates of disruption when political misfits leave or are pushed out. The recent splintering of Silicon Valley into an increasingly outspoken conservative venture capital industry and a still left-leaning broader tech sector appears emblematic of this wider trend.

8. More on the bad management that bedevils Northvolt, Europe's aspiring EV battery champion and a once darling of green energy investors.

Founded in 2017 by two former Tesla executives and with backers including Volkswagen, Goldman Sachs, BlackRock and Siemens, Northvolt grew rapidly as it sought to become a European battery champion, with its workforce reaching 7,000 this year... Northvolt hired top battery-making talent from Japan and South Korea as it aimed to reduce European dependence on China by developing its own active material and finding new sources of raw materials. Instead, employees describe a company reliant on machines — and the workers who operate them — from China and South Korea at its only factory in the northern Swedish town of Skellefteå... Northvolt has pursued ambitious expansion projects despite its struggles in Skellefteå. It planned to nearly quadruple the size of the Skellefteå factory even as production languished at less than 1 per cent of capacity, and to build new gigafactories in Sweden, Germany and Canada, an active material plant and a recycling facility in Sweden, an energy storage business in Poland and an aircraft battery research unit in the US. It has abandoned or suspended many of these projects in recent months, while executives hint that the new gigafactories are likely to be delayed. About a quarter of its Swedish workforce is to be fired...

Northvolt grew so fast in terms of employees and projects that processes were chaotic and management often incompetent, most of the workers said. “I have never seen so many managers and directors unprepared to deal with the situation in public, and how to properly address their employees,” said a quality control worker. They added that Northvolt had “a lot of inexperienced workers in all areas — managers, engineers, production, technicians, even directors”... A former data engineer said that despite joining “as an intern with no experience”, they had been given “massive responsibility because there was nobody else to do it . . . I was learning on the go, messing things up.” They added that frequent restructurings meant “it felt very chaotic”, with “the goal . . . changing all the time”.

And like with so many such startups, easy money has been central to the mess that Northvolt today finds itself in.

Northvolt became a darling of green investors, raking in ever larger amounts of capital including via a $2.8bn private placement in 2021, a $2.7bn convertible note in 2022 and a $5bn debt round this year backed by banks including JPMorgan, Citigroup, Deutsche Bank and BNP Paribas. Several employees said the strong financial support had led to questionable decisions. “Managers didn’t listen carefully to engineers,” said the construction worker. “They only had one goal: deliver the project within a fixed timeframe. They didn’t care about the budget.” Top managers “build a model, change it and demolish it”, they said. “It does not make sense to me. It makes sense to management because they think they have a lot of money.” A former material handler said there was a sense of creating products quickly to help raise money, describing the process as “this is going to get sent back but if we deliver it we will reach our goal and get the funding”.