Weekend reading links

1. While the US tariffs are undoubtedly reducing US imports from China, the imports are substituting towards other developing countries. See this about the trends with mobile phone imports.

And, this about imports of wooden furniture.

The moot point is how much of these imports are merely repackaging and re-routing of supply chains. 

2. Has Spain reached peak solar generation?

The country has become a solar champion thanks to abundant sunshine and the government’s pro-renewables policies. But a surge in power production has outpaced demand, depressing electricity prices and profits for generators. Some power producers are struggling to offload plants whose valuations have plunged as executives talk of solar “saturation”... Operational solar plants were valued at an average of €916,000 per megawatt in early 2024, but have now dropped to €648,000 per megawatt, according to nTeaser.

... the gloom is even greater over so-called ready-to-build projects, where land, permits and grid access have all been secured, but construction has not begun. A senior executive at an owner of Spanish solar plants said: “The market is flooded with ready-to-build projects that developers want to sell since they’re no longer good enough in the current market.” Some projects were up for sale for just €1, the executive said, reflecting developers’ desperation to avoid further spending, and potential government penalties for not executing agreed construction plans. The least attractive ready-to-build projects are often far from power grid nodes, requiring investment in expensive power lines.

... low prices are painful for producers. When they fall below zero, as they have for more than 500 hours in Spain this year, producers can end up having to choose between paying wholesale customers to take excess power off their hands or switching off. Many producers insulate themselves by selling electricity through long-term power purchase agreements (PPAs), which they sign at fixed prices with corporate clients for 10-20 years... Adding battery storage to solar plants helps to limit price plunges by enabling generators to store electricity when prices drop during the day, then sell it in the evening when demand and prices are higher.

3. John Burn-Murdoch points to a rising inflation in reported children with "special needs" in US and UK, with some distortions. 

38 per cent of undergraduates at Stanford this year are registered as having a disability, as are 21 per cent at Harvard — both up from 5 per cent in 2009... The bulk of the rise in special support for youngsters is cases of non-profound autism spectrum disorder (ASD), attention deficit hyperactivity disorder (ADHD) plus anxiety and mental health, all of which have flexible diagnostic criteria… we consistently see mild, not severe, cases driving the rise... As the number of more mild cases receiving support has climbed over the past decade, average funding per child (including the most severe cases) has fallen by a third in real terms… In 2010, 1 per cent of American young people from the poorest school districts were on plans that provide special support, and today that figure is unchanged. But among those in the richest areas, it has tripled from 2 to 6 per cent.

4. The Big 5 Indian IT firms have added just 17 net workers in the first three quarters of Fy26!

5. This is what industrialisation success looks like, the example of Hosur in Tamil Nadu, the leading EV and electronics manufacturing cluster in India.

6. India's industrial power prices are the highest.

7. Consumption's share of China's GDP is lowest among all major economies.

China’s decline in private final consumption expenditure is in sharp contrast to consumption-dependent economies like the United States (US) and India, with their share of private final consumption reaching 68.39 per cent (in 2022) and 61.38 per cent (in 2024) of their GDP, respectively. Among the top five economies of the world, China has the least share of private final consumption in its GDP. On the contrary, China has the highest share of fixed investment in its GDP – almost 10 percentage points higher than India’s share. Further, China has the largest share of net exports, after the EU.

8. The biggest trade promotion policy ever? The shipping container.

Nothing has done more to juice global trade than a simple receptacle—spanning about 40 feet on the long side and eight on the other two. It could be stuffed with cargo and hoisted onto lorries, trains, ships or planes with equal ease. That humble steel box—the standard shipping container—did “more than all trade agreements in the past 50 years put together” to boost globalisation

9. The US government has announced a $1.6 billion investment in USA Rare Earth, a listed Oklahoma-based miner that controls significant US deposits of heavy rare earths. 

One person said the government would get 16.1m shares in USA Rare Earth and warrants for another 17.6m, both at a price of $17.17. The government agreed to pay $277mn for the equity, giving it an implied gain of $490mn for the equity and warrants based on the current share price of $24.77. USA Rare Earth will also receive $1.3bn in senior secured debt financing at market rates from the government. The money will come from a finance facility created for the commerce department as part of the CHIPS and Science Act passed in 2022... A condition of the government investment in USA Rare Earth was that the company raise at least an additional $500mn from investors. It is on track to raise more than $1bn because of high demand for the financing deal, which uses a mechanism known as a private investment into a public equity, often called a “Pipe”...

USA Rare Earth, which has a market value of $3.7bn, is developing a huge mine in Sierra Blanca, Texas that it says contains 15 of the 17 rare earth elements underpinning production of cell phones, missiles and fighter jets. It also plans to open a magnet production facility in Stillwater, Oklahoma... Last year, the Trump administration invested in at least six minerals companies, including MP Materials, Trilogy Metals and Lithium Americas. Some of the investments overlapped with the financial interests of people associated with the administration. The government did a funding deal with Vulcan Elements, a rare earths start-up three months after the president’s son Donald Trump Jr’s venture capital group invested in the company... USA Rare Earth has separately tapped Cantor Fitzgerald, the Wall Street firm previously owned by commerce secretary Howard Lutnick and now run by his sons, to raise more than $1bn in fresh equity financing, the people said.

10. President Trump has announced his intention to cap credit card interest rates at 10% and has enlisted the services of an unlikely partner, Elizabeth Warren, to draft legislation in this regard. 

But a study by Liberty Street Economics found that spreads are high across all levels of credit ratings measured by so-called Fico scores and that default losses cannot explain the huge spreads above FFR... A recent Vanderbilt study concludes that at a 10 per cent cap, banks could continue profitably serving the vast majority of their customers... Americans pay about $160bn a year in credit card interest.

Sheila Bair, the former FDIC Chair, has this alternative proposal.

A better approach would be a permanent cap expressed as a spread over the FFR, say 10 per cent. This would be consistent with pre-crisis spreads. It would ensure that banks pass on the benefits when the Fed lowers rates but also allow them to raise rates when the FFR goes up. At the current FFR, it would bring credit card rates to just under 14 per cent.

11. Debashis Basu on the challenges with tripling exports by 2035, a CAGR of 13%. From history, South Korea increased its exports by a CAGR of around 18% between 1965-85, Taiwan by 16% in the 1965-80 period, Thailand by 14% in 1986-96, Malaysia by 14% in the 1987-2000 period, and Vietnam by 14% from 2005-24. 

History suggests that sustaining export growth of around 13 per cent for a decade requires these conditions: Cheap currency, strong central coordination and disciplined policy execution, a large surplus of labour at low wages, assured access to large and open markets, and a willingness to tolerate overcapacity and frequent failures. India currently possesses none of these in sufficient measure. Instead, it faces headwinds from rising protectionism, aggressive dumping by China, and reforms that are often procedural rather than outcome-oriented.

12. The non-profit only mandate for schools in India is among the biggest charades. 

India’s rules continue to insist that most private schools are “charities”. The result is a system that makes it hard to bring capital in openly or take returns out transparently. Founders instead resort to legal gymnastics. A single school is often split into three entities: a trust to hold recognition and collect fees; a land company to own the campus; and a services firm to run everything from transport to maintenance. Three entities mean three sets of books, audits, and compliance calendars. Even routine decisions, like paying salaries or upgrading infrastructure, require cross-entity coordination that adds weeks of delay. Hanging over all this is the lingering uncertainty of the government suddenly cracking down on the school or changing a rule about the trust... Every rupee that leaves the account must be defensible on paper. Salaries are routed as lease payments to a land-owning entity and as service fees to an operating company. Each transaction is vetted by his chartered accountant, ensuring no regulator can later accuse the school of making a profit—before it has even run payroll.

The arrangement is captured nicely here.

13. Tamal Bandopadhyay has an interesting article on the trends with central and state government borrowings.

In the current year, the central government’s gross borrowing is pegged at Rs 14.72 trillion, and net of redemptions, the net borrowings, at Rs 11.54 trillion... The gross SDL in the current year is Rs 11.83 trillion... Will there be demand for such a large borrowing programme? That’s the challenge before the RBI. In the current year, it has managed this by buying bonds from the market, popularly known as open market operations, or OMO. In FY26, a record Rs 6.45 trillion (till February 12) is being raised through this route, more than double of what the RBI had bought in FY25. The highest OMO before this was in FY21 – a little over Rs 3.13 trillion... 

Until the global financial crisis of 2008, the central government’s gross borrowing never crossed Rs 2 trillion. And SDLs were much lower – in thousands (for instance, Rs 20,825 crore in FY07). In FY09, the central government’s gross borrowing crossed Rs 2 trillion for the first time. The following year, it jumped to over Rs 4 trillion. The next big jump came in the Covid-hit FY21. From a little over Rs 7 trillion in the previous fiscal year, it rose to Rs 13.7 trillion that year. It crossed Rs 15 trillion in FY24, and is now set to cross Rs 16 trillion in FY27. Though the size of borrowing has increased over the years, as a percentage to GDP, it has remained largely in range... But SDL is becoming a burden. Before the global financial crisis, state loans were just 15-20 per cent of central borrowing every year. In FY27, these could be 75-80 per cent; and over the next few years, SDL may even exceed the centre’s annual borrowing. The oversupply of SDL has widened the spread between the yield of 10-year central government and state government papers to 85 basis points. Typically, it is about 40-50 basis points.

14. China is enhancing state capability by recruiting more tax officers to strengthen enforcement amid widening budget deficits. 

Central and local government tax departments plan to recruit 25,004 staff in 2026, accounting for two-thirds of the new bureaucrats to be appointed from among the millions taking part in fiercely competitive national exams, according to the state civil service administration. The plans mark a fourth successive year of heavy recruitment of tax officials, with the number of appointments set to marginally exceed a previous peak of 24,985 in 2023 to reach the highest level since at least 2012… Tax authorities have also announced moves to tighten tax enforcement and to scale back the use of corporate tax breaks by local governments… Authorities are also broadening the tax base by capturing more high-income earners, including those making capital gains on offshore equity investments… China’s tax revenues have fluctuated in recent years and fell 3.4 per cent year on year to Rmb17.5tn ($2.5tn) in 2024.

15. The rise and rise of Gold.

16. India mortgage housing market facts.

Housing accounts for 18 per cent of employment, making it the second-largest generator of jobs. It has deep linkages with more than 250 ancillary industries, creating powerful multiplier effects. Every investment in a housing unit generates 1.54 direct and indirect jobs and 4.05 induced jobs — much higher than employment multipliers in agriculture (0.8 and 1.2)... The average loan-to-value (LTV) ratio is a mere 65 per cent, compelling homebuyers to rely on other expensive borrowing sources for interiors and registration... less than 8 per cent of loan originations have an LTV greater than 80 per cent... even in a relatively safe asset class like mortgages, more than 75 per cent of lending is still to “prime” borrowers (bureau scores of 730 and above). The likelihood of a “near-prime” borrower (bureau score 650-700) getting a loan approval is just 40 per cent... housing finance to GDP ratio at 11-12 per cent is much lower than comparable economies.

17. What explains the weakness in East Asian currencies despite these countries running large surpluses, the general weakening of the US Dollar, and the smallest interest rate spread with the US in years?

Heavy buying of US assets, and concerns on how to fulfil the pledges from Japan, South Korea and Taiwan to invest $550bn, $350bn and $250bn in the US, and Sanae Takaichi's large spending plans are contributors. 

18. On the historic India-EU FTA deal.

Under the deal, Indian levies on EU cars will be gradually reduced from 110 per cent to 10 per cent, with a quota of 250,000 vehicles a year. Tariffs of up to 44 per cent on machinery, 22 per cent on chemicals and 11 per cent on pharmaceuticals will be mostly eliminated. Steel and iron levies of up to 22 per cent will also be phased out over a 10-year period... Tariffs of more than 36 per cent on EU food products will be reduced or removed, the bloc said, while those on wine will be slashed from 150 per cent to 75 per cent and eventually to levels as low as 20 per cent. Olive oil tariffs will also fall from 45 per cent to zero over five years. Those on processed agricultural products, such as bread and confectionery, of up to 50 per cent will be eliminated. In exchange, more than 99 per cent of Indian exports, worth about $75bn, will gain preferential entry status to the EU... The Indian dairy industry, a politically important constituency that New Delhi has sought to protect in the past, was excluded from the deal. Sensitive EU agricultural sectors, such as beef, chicken, rice, sugar and ethanol, were also carved out.

Individuals matter, and more so in public bureaucracies

I blogged here about the importance of strong public oversight and in-house expertise for the successful execution and management of infrastructure projects. 

Mainstream development discourse focuses disproportionately on institutional and systemic challenges, and overlooks the important role played by individual officials in effective public services delivery and the realisation of policy outcomes. 

Specifically, I am referring to the commitment and expertise of individual public servants in important positions at all levels of the government. By important, I’m not confining to leadership positions, but any position where they can make significant contributions to influence the agenda. 

The importance of individual officials in the success of development interventions is generally overlooked amidst systemic and institutional factors. This also comes from the belief that the success of development interventions is determined by good ideas, comprehensive planning, and rigorous monitoring. This theory of change overlooks the reality that successful development interventions tend to emerge iteratively over the course of their implementation. Such iteration, in turn, requires capable and committed leadership, especially important given weak state capabilities. 

In fact, it is no exaggeration to argue that capable, proficient, and committed officials are perhaps the most important ingredient of state capability. 

The importance of capable individual officials is also borne out by academic research. I blogged here, drawing attention to the work of Philipp Barteska and Jay Euijung Lee, who examined the impact of the bureaucratic capabilities (of export promotion officers) on the effectiveness of industrial policy in terms of export performance in South Korea. They found the following:

We exploit the three-yearly rotation of managers of South Korea’s export promotion offices in 87 countries between 1965 and 2000 to show that a one standard deviation increase in bureaucrat ability boosts exports by 37%. Under higher-ability bureaucrats, South Korean exports respond more strongly to a country’s import demand, suggesting a more effective transmission of market information.

An increase in exports by nearly two-fifths with just one standard deviation increase in bureaucratic capability tells us that the quality of officials might matter more than (or at least as much as) fiscal incentives and regulatory changes in trade promotion efforts. 

Alessandra Fenizia studied the impacts of managers in the public sector in Italy using a dataset containing an output-based measure of productivity. 

Exploiting the rotation of managers across sites, I find that a one standard deviation increase in managerial talent raises office productivity by 10%. These gains are driven primarily by the exit of older workers who retire when more productive managers take over. I use these estimates to evaluate the optimal allocation of managers to offices. I find that assigning better managers to the largest and most productive offices would increase output by at least 6.9%.

Cristobal Otero and Pablo Munoz study government managers in public health provision in Chile. 

Using novel data from public hospitals in Chile, we document that top managers (CEOs) account for a significant amount of variation in hospital mortality. We then use a staggered difference-in-differences design, and show that a reform which introduced a competitive selection system for recruiting CEOs in public hospitals reduced hospital mortality by approximately 8%. The effect is not explained by a change in patient composition and is robust to several alternative explanations. The financial incentives included in the reform—performance pay and higher wages—do not explain our findings. Instead, we show that the policy changed the pool of CEOs by displacing older doctors with no management training in favor of younger CEOs who had studied management. The mortality effects were driven by hospitals in which the new CEOs had managerial qualifications. These CEOs improved operating room efficiency and reduced staff turnover.

Michael Carlos Best, Jonas Hjort, and David Szakonyi analyse data on public procurements in Russia and find the value of bureaucratic effectiveness. 

Using data on 16 million public purchases in Russia, we show that 39 percent of the variation in prices paid for narrowly defined items is due to the individual bureaucrats and organizations who manage procurement. Low-price buyers also display higher spending quality. Theory suggests that such differences in effectiveness can be pivotal for policy design.

R D Metcalfe, A B Sollaci, and C Syverson

In this setting, managers move between stores but management practices are set by firm policy and largely fixed, allowing us to hone in on managers’ personal roles in determining store performance. We find: (i) managers affect and explain a large share of the variance of store-level productivity; (ii) negative assortative matching between managers and stores, which may reflect both firms’ decisions and a selection-driven bias that we characterize and argue might apply in other settings using movers designs; (iii) managers who move do so on average from less productive to more productive stores; (iv) female managers are less likely to move stores than male managers; (v) manager quality is generally hard to explain with the observables in our data, but is correlated with the ratio of full-time to part-time workers; (vi) managers who obtain high labor productivity also tend to obtain high energy productivity, revealing some breadth in managers’ skills applicability; (vii) high-performing managers in stable growth times are also high-performing during turbulent times; and (viii) exogenous productivity shocks improve the quality of initially low quality managers, suggesting managers can learn. We explain implications of these findings for productivity research.

Ricardo Dahis, Laura Schiavon, and Thiago Scot investigated the performance of state judges in Brazil. 

We investigate this question focusing on state judges in Brazil. Exploring monthly data on judicial output and cross-court movement, we estimate that judges account for at least 23% of the observed variation in number of cases disposed. With novel data on admission examinations, we show that judges with higher grades perform better than lower-ranked peers. Our results suggest competitive examinations can be an effective way to screen candidates.

On a slightly different note, Kevin Hawickhorst shows how technical expertise built up within public systems in the US allowed for the nurturing and flourishing of capable officials, created public confidence, and thereby enhanced the credibility of governments. 

However, over time, expertise has come to be crowded out due to the conscious shift in the way government bureaucracies came to be organised. 

At the turn of the twentieth century, agencies followed a distinct blueprint: they were organized by subject matter, not by abstract function. Each bureau focused on a single domain—such as soils, mines, or forests—and combined research, regulation, and grants under one roof. In the U.S. Department of Agriculture (USDA), the Bureau of Entomology, for example, studied insect-borne diseases, issued rules to contain them, and funded farmers to protect their crops, all as part of a single mission. This structure helped agencies recruit experts by offering broader, more meaningful work than corporations could, and it built a shared sense of mission rooted in a vocational community.

Today’s agencies look very different. After World War II, reformers dismantled the integrated subject matter bureaus and reorganized government along what they called “functional” lines. In this system, regulation is one bureau, research another, and grant administration still another; each bureau covers a wide range of subjects and is defined by its activity rather than its mission. It is the model we now take for granted. The Bureau of Entomology is gone, and USDA now houses all agricultural research in a single unit. New agencies were built this way from the outset: the Department of Housing and Urban Development, created in 1965, was designed as a grantmaking machine, never a vocational community.

The shift was a well-intentioned one and backed by a wide coalition of reformers, businessmen, and interest groups. Functional departments looked modern, rational, and efficient: they simplified charts, tightened chains of command, and promised to reduce duplication. But what seemed like sensible reform gradually hollowed out the structures that had made expertise durable. Once government agencies lost their vocational missions, they stopped drawing on networks of expertise and started looking like paper mills, less able to command political respect, and more vulnerable to capture and drift… logic of the Progressive-era model: that research and administration had to remain intertwined within a unified mission if expertise was to thrive.

However, this wealth of internal technical expertise has, over time, given way to the tribe of generalist managers. 

The core mistake was a shift in what we thought expertise was. The Progressive reformers built vocations that were tied to missions, visible to the public, and legible to politicians. Their successors redefined expertise as a credential: the knowledge of process rather than mastery of a craft. To businessmen and academic reformers alike, competence meant general managerial skill, not professional vocation. As this view took hold within the bureaucracy, “expertise” came to mean knowing the procedures rather than knowing the work. We have traded the civil engineer and the entomologist for the program analyst, the management consultant, and the diversity officer—experts who know how to manage the process but not how to do the work.

This redefinition of expertise hollowed out our idea of representation. We now equate representation with participation and diversity, as if the state were legitimate only when citizens can see themselves in its officials. The Progressives, by contrast, recruited from the country’s varied vocations and made that work visible to the nation. Expertise was representative not because it resembled the public but because it served the public, visibly and competently… Their institutions were built to make expertise endure, by recruiting promising candidates from vocational schools and professional societies, dressing them in uniform, and sending them to work alongside state engineers, agricultural agents, and university researchers…

The Navy cannot build ships. In 1940, faced with the same problem, Congress did the obvious: it created a Bureau of Ships, put engineers in charge, and got ships built. That bureau is gone, and we treat its return as unthinkable. Yet the remedy remains the same. If we want ships, we should once again have a Bureau of Ships to build them… Repairing our institutions will ultimately require returning to the vocational conception of expertise… We have built institutions that valorize process in place of vocation, producing a bureaucracy that neither embodies skill nor commands respect. What matters now is not saving “expertise” in the abstract but rebuilding the institutions where it can serve visibly and credibly.

Hawickhorst’s essay points to several individual public leaders in the US who built institutions and brought credibility and confidence in public agencies through their careers - George Uhler (headed Steamboat Inspection Service for 20 years from 1903), Logan Page (Office of Public Roads, founded in 1905), Joseph Kinyoun (headed the Hygienic Laboratory, a precursor to the National Institutes of Health), and Gifford Pinchot (founded the Forest Service). Every country has such leaders across levels. 

In their search for better outcomes in public policy, governments tend to expend effort and resources on interventions involving financial support, regulatory enablers, and technology adoption, while overlooking personnel choices. This bias is also reflected in public commentary and academic research that shapes public narratives. 

However, as the case of the South Korean export promotion officers starkly demonstrates, for governments intent on reform and impact, personnel choice decisions may be the lowest-hanging fruit. In most policy areas, the range between the opportunity cost of a bad personnel choice and that of a capable personnel choice may be much greater than that for any other policy intervention.

The private sector addresses the issue of the importance of capable individuals by incentivising them with extrinsic material motivations like financial rewards and fast-tracked promotions. While neither of these instruments is available to governments, it can appeal to the intrinsic motivation of public-spirited officials. 

This would require acknowledging capabilities and merit (as borne out strictly by performance track record, not merely in some narrow quantitative sense). This requires differentiating capable bureaucratic leaders from their larger peer group by entrusting them with higher responsibilities, appointing them to identified important positions, drawing on their expertise in various forms, recognising their work through different non-financial channels, and generally signalling their differentiation. 

An explicitly professed intent, let alone a rigorously implemented process, that seeks to differentiate among officials at all levels, can be a powerful force to shape expectations and align incentives within public systems.

Market failures in deep tech markets

There’s a fundamental competition problem in markets where network effects (e.g., the platforms offered byAmazon, Google, and Meta) and/or technological path dependencies (e.g. Nvidia’s constantly evolving versions of ever more sophisticated GPUs) create rising entry barriers and confer ever-widening competitive advantage, and where accordingly companies are incentivised to deepen their moats and keep expanding their market shares.

As an illustration, the Dutch lithography behemoth, ASML, may have the deepest and broadest moat among firms in any industry. 

Even in an industry with dominant or near-monopolistic firms - Nvidia in the design of chips that run AI applications, TSMC in the fabrication of processing chips, and Samsung and SK Hynix in high bandwidth memory (HBM) chips - ASML stands out. Consider the extent of its monopoly.

ASML sells just over 40 of its most advanced chipmaking machines each year. For over a decade, investors questioned whether such limited volumes could ever add up to a viable business. Those doubts have aged badly. After an 80 per cent rise in its share price over the past six months, ASML is now valued at more than $500bn... It is the only company that can make the extreme ultraviolet lithography machines required to produce those advanced chips. Each one has a starting price of $220mn and there is no commercially credible alternative supplier... In most industries, a monopoly this profitable — ASML’s gross profit margins were 52 per cent in the third quarter — would attract competition, especially from regions that already lead in related technologies.

What explains this monopoly?

The technology behind EUV machines is a chain of almost impossible steps, all of which have to work at the same time. Modern chips are made by printing patterns, layer by layer, on to silicon using light. To do this, engineers first need to create a form of light that does not occur naturally. Powerful lasers are fired at microscopic droplets of molten tin, turning them into plasma hotter than the surface of the Sun. That creates a pulse of extreme ultraviolet light, which is then reflected off a series of mirrors, each made with atomic-level precision and taking months to make, before the pattern is finally transferred to the silicon wafer. The hardest part to replicate is the optics. EUV-grade mirrors are produced by a single supplier: Carl Zeiss SMT. They are the product of decades of tightly integrated development between Zeiss and ASML.

Even if a peer could replicate that technology, the economics do not work. Any new entrant would sell too few machines each year to recover development costs, yet those machines would still be expected to deliver near-perfect reliability from day one. Chip fabrication plants operate continuously… As a result, chipmakers are unwilling to experiment with unproven EUV tools in volume production. That means a rival would never accumulate the field data required to improve. 

ASML shipped its first EUV machine in 2006 and its first production capable system in 2013. Because chip factories run around the clock, cumulative operating hours now run into the millions. That gap in real world operating data explains why Nikon and Canon, once ASML’s peers in lithography, ultimately withdrew from pursuing EUV lithography systems over a decade before it became commercially viable, and why no successor has emerged since their exit… ASML shows how, beyond a certain technological threshold, markets no longer correct monopolies.

ASML may be the most egregious illustration of a pervasive market failure in deep technology markets, arising from innovation-induced moats. 

This moat is a result of the structural characteristics of the technology that creates a dynamic natural monopoly, arising from a combination of a long period of co-evolution with suppliers and customers, unmatchable accumulated R&D and tacit knowledge, high capital intensity and irreversibility (once invested, exit is costly and entry is irrational), and very long time horizons. In fact, the entire semiconductor chip design-to-fabrication value chain, including the equipment used, can be considered a stack of interlocking monopolies. 

It is therefore unsurprising that this is the only major market where China has struggled to make a breakthrough. All the dominant firms are either US, European, or Japanese. 

Such market failures are true across deep technology markets - commercial aircraft (Boeing/Airbus), jet engines (GE Aerospace, Rolls-Royce, Pratt & Whitney), electron microscope (Thermo Fisher Scientific, JEOL), industrial automation (Siemens, Rockwell Automation), etc. 

Traditional anti-trust measures are unlikely to be effective in addressing market failures arising from the structural characteristics of the technologies involved. As the Chinese are finding out, even throwing massive amounts of money can do little to cross the moats.

In addition to the moats created by the structural characteristics of the technology itself in these deep tech products, the manufacturing of major components for these products is also protected by daunting entry barriers arising from the market structure. 

Take semiconductor chip design, say, for a market for System on Chips (SoC) for various digital equipment (laptops, cameras, mobile phones, telecom equipment, etc.). This market is dominated by the likes of American (Qualcomm and Broadcom) and Taiwanese (Mediatek and Realtek) SoC designers. The OEMs in this market, themselves large multinational incumbents, are locked into close long-term partnerships with one or other of these companies. 

Even if a new chip design startup assembles a solid team and does tapeouts of an SoC that can be readily deployed in a device, it would still need an OEM to deploy the same. However, the OEM, which has a well-established supply chain, would have limited incentive to risk the experiment of trying out a brand-new supplier for any component, much less a critical one like the SoC. The OEM’s concerns are understandable given that it would require deep and mature institutional capabilities for the supplier to respond swiftly to rapidly evolving technologies and standards (for example, in telecommunications, a new 3GPP release happens every 6-12 months) and the resultant demands of the OEM. 

This is a problem not just to SoC but to any chip, or any other sophisticated electronic component, where moats are high. The net result is that breaking into this market becomes almost impossible. Since component manufacturing is generally an essential requirement to catalyse product manufacturing, barriers to the former end up further entrenching incumbents in the latter. 

It is relevant here that Chinese firms have made some headway in these markets. Their breakthroughs have come by riding on a wide base of domestic OEMs. In their quest to diversify away from the Western chip firms and lower their costs by leveraging their massive volumes (also from their ever-expanding export volumes), they had the incentive to bet long-term on domestic chip design firms. As a practice, starting with a small share of their overall requirement, they gradually increase the share of their sourcing from domestic chip firms. The massive subsidies and the strong push by the Chinese state to nurture indigenous firms have facilitated this process. 

The chip design firms, too, have generally started with a less sophisticated version of chips, developed capabilities and moved up the value chain into more sophisticated versions. 

As an example, by privileging a Chinese 3G standard, Beijing forced carriers and vendors to adopt equipment and handsets that supported it — creating immediate, captive volume for domestic baseband suppliers. That is a strong example where a regulatory mandate (a standard) directly created market share for local firms.

So what can be done to lower the moats and enable entry in some of these markets?

In these markets, where moats are so deep and wide, industrial policy actions by way of financial incentives (subsidies) to lower entry barriers may struggle. How much incentive is adequate to bridge the disability faced by domestic chip firms? How will it help open up the platforms of OEMs to the new chip design firms? There are hard limits to how much support can be given by fiscally constrained governments.

Therefore, in some of these markets, notwithstanding their distortionary risks, hard constraints by way of mandates may be required to break the entrenched market equilibrium of dominant foreign OEMs and their suppliers. These mandates can take the form of domestic content rules, public procurement preferences, and standards.

These mandates must be carefully designed and implemented to minimise market distortions and inefficiencies. It may be advisable to start the domestic mandate with a small percentage of sourcing, and that too in components where local capability is plausible, and by allowing tradeable compliance credits (firms unable to source locally can buy credits that fund supplier development). There should also be sufficient safeguards in terms of waivers and emergency provisions that allow temporary exceptions. Most importantly, the mandates should be administered transparently and closely monitored to make course corrections if required.

For sure, these mandates can only create some initial market access and cannot work on their own. They must be complemented with industrial policy incentives, patient risk capital, supply-chain development, and commercial incentives for OEMs. And even with all these, it can be effective in facilitating entry only to a few deep tech market segments.

Alliances and coalitions in the new world order

Mark Carney delivered the speech for the times at Davos. It is a brilliant description of the challenges facing the international order in times of intensifying great-power rivalry, due to a declining hegemon and a rising superpower, and articulates a prudent yet values-based way forward. 

It is highly relevant to middle powers like India. 

The speech hangs on Vaclav Havel’s analogy of the greengrocer’s myth to explain how the communist system sustained itself, and how the rules-based international order has sustained itself so far despite its obvious observed deficiencies.

Every morning, this shopkeeper places a sign in his window: ‘Workers of the world unite’. He doesn’t believe it, no-one does, but he places a sign anyway to avoid trouble, to signal compliance, to get along. And because every shopkeeper on every street does the same, the system persist – not through violence alone, but through the participation of ordinary people in rituals they privately know to be false.

Havel called this “living within a lie”.

The system’s power comes not from its truth, but from everyone’s willingness to perform as if it were true, and its fragility comes from the same source. When even one person stops performing, when the greengrocer removes his sign, the illusion begins to crack. Friends, it is time for companies and countries to take their signs down.

Carney describes the rules-based international order as a similar lie, a fig-leaf for countries to “pursue values-based foreign policy”, though they knew that the “strongest would exempt themselves when convenient”, “trade rules were enforced asymmetrically”, and “international law applied with varying rigour depending on the identity of the accused or the victim”. 

This fiction was useful, and American hegemony, in particular, helped provide public goods, open sea lanes, a stable financial system, collective security and support for frameworks for resolving disputes. So, we placed the sign in the window. We participated in the rituals, and we largely avoided calling out the gaps between rhetoric and reality. This bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition.

Over the past two decades, a series of crises in finance, health, energy and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited. You cannot live within the lie of mutual benefit through integration, when integration becomes the source of your subordination.

The speech makes the case for building alliances to preserve strategic autonomy and sovereignty, but one underpinned by shared values. 

Collective investments in resilience are cheaper than everyone building their own fortresses. Shared standards reduce fragmentations. Complementarities are positive sum. And the question for middle powers like Canada is not whether to adapt to the new reality – we must. The question is whether we adapt by simply building higher walls, or whether we can do something more ambitious… And our new approach rests on what Alexander Stubb, the President of Finland, has termed “value-based realism”.

Or, to put another way, we aim to be both principled and pragmatic – principled in our commitment to fundamental values, sovereignty, territorial integrity, the prohibition of the use of force, except when consistent with the UN Charter, and respect for human rights, and pragmatic and recognizing that progress is often incremental, that interests diverge, that not every partner will share all of our values.

So, we’re engaging broadly, strategically with open eyes. We actively take on the world as it is, not wait around for a world we wish to be. We are calibrating our relationships, so their depth reflects our values, and we’re prioritizing broad engagement to maximize our influence, given and given the fluidity of the world at the moment, the risks that this poses and the stakes for what comes next. And we are no longer just relying on the strength of our values, but also the value of our strength. We are building that strength at home… 

To help solve global problems, we’re pursuing variable geometry, in other words, different coalitions for different issues based on common values and interests… This is not naive multilateralism, nor is it relying on their institutions. It’s building coalitions that work – issues by issue, with partners who share enough common ground to act together… What it’s doing is creating a dense web of connections across trade, investment, culture, on which we can draw for future challenges and opportunities. Argue, the middle powers must act together, because if we’re not at the table, we’re on the menu.

This is a summary of the way forward

This is not sovereignty. It’s the performance of sovereignty while accepting subordination. In a world of great-power rivalry, the countries in between have a choice – compete with each other for favour, or combine to create a third path with impact… It means acting consistently, applying the same standards to allies and rivals. When middle powers criticize economic intimidation from one direction, but stay silent when it comes from another, we are keeping the sign in the window… And it means reducing the leverage that enables coercion – that’s building a strong domestic economy. It should be every government’s immediate priority. And diversification internationally is not just economic prudence, it’s a material foundation for honest foreign policy, because countries earn the right to principled stands by reducing their vulnerability to retaliation.

There is no disputing the need for middle-powers to build alliances and coalitions. Apart from the innate coordination problems with building such alliances, there are at least three other challenges with the pursuit of such a foreign policy. 

First, there’s a difference between the pursuit of such policies that are built predominantly on opportunism and less on shared values. Therefore, for example, it should not be about embracing principles on anti-terrorism, or the inviolability of national borders, or the promotion of free trade, or the protection of human rights, but only when convenient, and condoning their egregious violation otherwise. There’s a difference between realpolitik and values-based realism. The big powers can pursue the former (they are expected to), but when practised by the middle-powers, the hypocrisy becomes too evident. And in the repeat game of international politics, it erodes national credibility. Non-alignment may have been a good example of values-based realism.

Second, such alliances and coalitions are built on accommodation involving mutual give and take. It’s about “shared sovereignty”. Core interests cannot be compromised, but secondary interests can be. Compromise is also not a binary choice, but in shades of grey and white. In any case, a country cannot share in the benefits of an alliance without a willingness to assume its costs. China’s hypocrisy on international trade becomes egregious since it only wants a one-way street - access to export markets while systemically restricting and disincentivising imports. 

Finally, such values-based accommodation becomes impossible when foreign policy becomes another instrument for projecting nationalism and populism. A fundamental tension envelopes when this genie is out of the bottle. Populist rhetoric constrains an already limited policy choice space available for diplomats and makes any kind of accommodation an acknowledgement of weakness, provoking accusations of being a traitor. There’s a reason why foreign policy has traditionally been pursued outside the glare of publicity. However, if the genie is out of the bottle, it might well be impossible to put it back in for some time.

Middle powers must take cognisance of these challenges and tailor foreign policies and their contexts accordingly. 

In a more realpolitik sense, it is also prudent for middle powers, for generally everyone other than the big powers, to follow Chinese President Jiang Zemin’s dictum that China adhered to for a long time, “hide your strength, bide your time” (Taoguang Yanghui). 

PS: While Mark Carney was statesmanly and his extraordinary speech rightly went viral, Belgian Prime Minister Bart De Wever was equally forthright and brave:

“So many red lines have been crossed [by Trump] . . . Being a happy vassal is one thing. Being a miserable slave is another. If you back down now, you are going to lose your dignity and that is probably the most valuable thing you can have in a democracy.” 

Weekend reading links

1. Indian software industry productivity facts

Over the past decade, India’s top five outsourcing companies have managed to raise labour productivity by less than 2 per cent annually because of their squeamishness to put more fixed capital behind human effort: The average value added by an employee has risen to roughly $40,000 a year, from $34,000 in 2015. The modest gains are going to labour, although not at the entry level where salaries have been stagnant. Profit per worker, in my calculations, has been practically unchanged in dollar terms.

2. Concentration in the VC industry.

The top 10 most valuable private companies, including OpenAI, ByteDance, Anthropic and SpaceX, have been sucking up funding mega-rounds and are collectively valued at $2tn. The top 10 most active VC funds, including General Catalyst, Andreessen Horowitz, Sequoia and Accel, are heavily focused on AI. “The most influential investors are essentially running concentrated AI funds, not diversified portfolios,” CB Insights concluded. 

One other significant difference today is how the Big Tech companies are reshaping the start-up universe given their overlapping roles as suppliers, customers, competitors, funders and acquirers. The Magnificent Seven US tech companies — Nvidia, Alphabet, Microsoft, Amazon, Apple, Meta and Tesla — dominate the tech landscape in a way that was not the case at the dawn of the internet era. These giant companies are massive allocators of capital in their own right, investing almost as much as the entire VC industry. They also provide start-ups with AI software, cloud computing services and direct investment funding through their own sizeable corporate venture capital arms. But they are furiously rolling out AI themselves in sectors as varied as video generation, healthcare, autonomous driving and scientific discovery. Every time a giant AI company releases a new generative AI model, scores of undifferentiated start-ups shrivel up and die.

3. Oil industry trends 

Oil executives seem to not only be balking at the risk of having assets nationalized but also expressing a view that has become standard across the sector: Big new projects have to survive intense scrutiny. Venezuela’s tar-like oil has to be diluted to flow through a pipeline. It has to be upgraded locally before it even gets to a refinery. That’s a multi-billion-dollar expense. For most of the past 15 years, Big Oil was focused on projects — such as drilling for North American shale oil — that have a quick and predictable payback, even though their production drops off steeply after the first year. To some extent, the companies deprioritized projects such as those in offshore oil, or heavy crude deposits like Venezuela’s, that keep producing at low cost for 10 to 20 years but require more upfront investment to bring online.

So a lot of oil came from fields that were low in risk but relatively high in cost. According to Rystad Energy, a research company, in 2024 North American shale had a break-even cost of $45 a barrel. That was expensive compared with offshore deepwater ($43), offshore shelf ($37) and onshore Middle East ($27). From 2014 to 2024, daily crude production in the United States increased 71 percent, while production in the rest of the world actually decreased a couple of tenths of a percent, according to data in the Statistical Review of World Energy 2025. That’s changing a bit. North American shale is beginning to be tapped out, although the oil majors are using advanced technology to get more oil out at lower costs. Since around 2022, when Russia invaded Ukraine and oil prices spiked, the oil majors have shifted some of their interest back toward higher-risk, longer-payout projects in parts of the world where the oil is cheapest — not North America. Exxon and Chevron have explored bidding on exploration opportunities in Libya. Last year, Chevron signed an agreement in principle to develop Iraq’s vast Nasiriyah oil field and other assets. Exxon is also in discussions with Iraq.

Interesting that Trump is forcing his oil companies to invest in a country that has historically been univestable despite its abundance of oil reserves, one reason being the high cost of extraction of the country's heavy crude (costs $70 to extract a barrel, when oil sells for $58). 

4. In 2017 when Donald Trump said he was going to pull the US out of the Paris Agreement, this was the reaction of corporate America.  

“Today’s decision is a setback for the environment and for the US’s leadership position in the world,” wrote Lloyd Blankfein, Goldman’s then chief executive, in his first post on what was then Twitter. Facebook’s Mark Zuckerberg agreed, saying the move was “bad for the environment, bad for the economy, and it puts our children’s future at risk”. Tesla’s Elon Musk and Walt Disney’s Bob Iger both quit White House business advisory councils. At Apple, Tim Cook said he had tried but failed to persuade Trump to abandon a move that would have “no impact on Apple’s efforts to protect the environment”. And other corporate leaders spoke out with equal force.

Last week he announced US exit from both the 34-year old parent of the Paris Agreement, the UN Framework Convention on Climate Change, and the UN's 38-yar-old Intergovernmental Panel on Climate Change, it was met with silence from the same people. 

5. China violates Taiwan's airspace with a drone for the first time,

A Chinese surveillance drone entered the airspace of Pratas, a Taiwan-controlled island in the South China Sea also known as Dongsha, for four minutes on Saturday. The unmanned aerial vehicle was a WZ-7 known as ‘Soaring Dragon’ according to a Taiwanese national security official. It flew at an “altitude outside the range of our air defence weapons and left following warnings Taipei broadcast via international radio channels”, Taiwan’s defence ministry said in a statement... “China has found another soft spot,” said Kitsch Liao, an associate director at the Atlantic Council’s Global China Hub. “They can repeat this to demonstrate that they can enter Taiwan airspace with impunity. And what do you do if they start flying lower and lower? If you decide to shoot the drone down when it comes into range, China can blame Taiwan because it didn’t do anything before.”

6. Ishan Bakshi makes some very important points on the central government's tax revenues on the back of the lowering of corporate taxes in 2019, the rejigging of the personal income tax slabs in the Union Budget of 2025-26, and the GST rate rationalisation of late 2025.

The net impact of these fiscal steps — even as the direct and indirect tax base has significantly expanded over the past decade — is constrained finances, forcing governments to restrain expenditure, despite the bluster of lavish spending. The estimates of the extent of revenue foregone due to these tax cuts vary considerably. Nonetheless, they are quite significant. For the corporate tax cuts, the initial estimates pegged the revenue foregone at Rs 1.45 lakh crore, while in the case of the income taxes, it was around Rs 1 lakh crore. For GST, while precise estimates are difficult to arrive at, they will reflect slowly in tax collections... Over the past decade, the Centre’s tax collections have barely inched upwards – net tax revenues were 7.2 per cent in 2014-15 and were budgeted at 7.9 per cent in 2025-26. Collections may, in fact, end up being lower this year.

7. Tim Harford writes about smart fitness tracker watches and their health behaviour tracking. 

...in a study conducted with behavioural scientists Linda Chang, Erika Kirgios and Sendhil Mullainathan. The researchers asked a simple question: “Do we decide differently when some dimensions of a choice are quantified and others are not?” The answer emerged loud and clear from a series of experiments: yes, we do. Whenever experimental subjects were offered a choice between two options, they would tend to favour whichever option looked better on numerical measures and overlook qualities that were expressed as graphical elements, letter grades, star symbols or in words (“moderate”, “excellent”, “highly likely”). This was true whether the choice was between hotels, job applicants, conference locations, public works projects, restaurants or charitable causes. Numbers loomed large. What was quantified, got attention. This matters because fitness trackers purport to excel at quantifying some things and do not pretend even to quantify others. If quantification fixation applies, we would expect to see such trackers systematically pushing people towards the quantified behaviour at the expense of other things.

And the perverse incentives generated from such health behaviour tracking.

Larger studies strongly suggest that fitness trackers do not usually hinder weight loss, but the surprising and disheartening finding is an example in miniature of the quantification-fixation problem. In this case, both groups were equally active, but those using a fitness tracker were getting automatic, effortless validation of their effort, which they could then use to justify more indulgent eating. The lead researcher, John Jakicic, speculated at the time: “People would say, ‘Oh, I exercised a lot today, now I can eat more.’ And they might eat more than they otherwise would have.” Calorie counting is joyless, easily fudged — and not automated by the watch. We’re all familiar with the tendency to be virtuous in one aspect of our behaviour, then let ourselves off the hook somewhere else — choosing a healthy salad, then using it as permission to order dessert. Psychologists call this behaviour “self licensing” and fitness trackers encourage it by supplying us with asymmetric data. We are told how much we moved, but not what we ate. We get stark feedback on heart rate and step count, but the tracker looks the other way if we order french fries and a glass of beer.

8. Tej Parikh thinks that China will win the AI race with the US. I think this piece is one of the least persuasive ones from Parikh.

9. As anti-immigration and nationalism trends rise, it is likely that US companies will show increasing preference for US-born chief executives. 

Foreign-born CEOs already face a more difficult time than native ones. Academic research shows they are held to a higher standard for performance and are more likely to be dismissed when things are going wrong. They also have to work harder to prove their legitimacy and trustworthiness. In politicised environments, the margin for error becomes smaller.

10. The continuous weakening of rupee despite the combination of low inflation, high GDP growth rates, and low current account deficit (around 1% of GDP) can be traced to the worsening trade balance and weak FDI inflows. 

Merchandise imports averaged about $62 billion a month in 2025, far exceeding exports of roughly $37 billion and leaving a $25 billion trade deficit. Although services exports offset much of this gap, weak goods exports and a rising import bill — driven in part by higher gold and silver prices — have skewed demand towards dollars... In 2025, foreign portfolio investors (FPIs) withdrew about $19 billion from Indian equities on a net basis — the worst outflow on record... Gross FDI inflows have been stuck at around 1.7 per cent of GDP since early 2023, well below the 3 per cent seen in the mid-2000s... Between January 2024 and October 2025, gross FDI inflows averaged about $7 billion a month, while withdrawals ran close to $4 billion, leaving net inflows of barely $3 billion — negligible for a $4 trillion economy. Once rising outward investment by Indian firms, averaging $2-3 billion a month, is taken into account, the picture worsens. In effect, India has received close to zero net FDI each month over the past 22 months.

In fact, net FDI has been negative for last three months. 

Data shows that net FDI in November was negative $446 million, compared with negative $1.67 billion in October.

11. Disinvestment facts for India.

Lowering the government’s stake to 51 per cent in 78 listed public-sector enterprises (PSEs) could unlock value worth about ₹10 trillion.

12. Ashok Gulati has a summary of the food subsidy.

In the case of rice, the economic cost hovers around Rs 42/kg, and for wheat, it’s around Rs 30/kg to FCI. It gives 5 kg of free rice or wheat to about 813 million people under the PM Garib Kalyan Yojana. Roughly 56 per cent of the country’s population of around 1.5 billion is covered. The introduction of point of sale (POS) machines in more than 5 lakh fair price shops (FPS) was a significant reform of the Modi government. It helped to reduce massive leakages in PDS. But how rational is giving free food to 56 per cent of the population, when, according to the World Bank’s extreme poverty criteria — $3 per capita/day/in purchasing power parity (PPP) terms at 2021 prices — India’s poverty came down to just 5.3 per cent of the population in 2022? Even at a higher poverty line of $4.2/per capita/day, poverty in India was about 24 per cent. One can argue that the extremely poor need to be given free food (antyodaya). Viewed from this perspective, only about 5 per cent of the country’s population needs free food, while others should pay at least half of the MSP. If not, then this policy is nothing but the biggest political revdi (dole) the government is giving consumers for votes.

13. FT Alphaville suggests that the threat of pulling out from the $35 trillion foreign holdings of US financial assets is not a credible option for Europeans and others trying to exercise leverage over the US. 

While the US’s large current account deficit suggests that in theory there is the potential for the USD to drop should international savers stage a mass retreat from US assets, the sheer size of US capital markets suggests that such an exit may not be feasible given the limitations of alternative markets.

14. Amidst China's real estate crisis, this stands out

China had about 440 square feet of housing for each man, woman or child living in cities in 2024, up from 340 square feet only 15 years earlier. It was less than 100 square feet per person before Mao Zedong’s death in 1976.

15. In a ruling that has far-reaching implications for how India applies tax treaties to offshore transactions, the Indian Supreme Court has ruled on the tax treatment of Tiger Global's capital gains from the sale of its investment in Flipkart (done through three Mauritius-based entities) to Walmart for about $1.6 billion in 2018. 

Tiger Global had argued that capital gains on the transaction should only be taxed in Mauritius and not India, in line with a treaty in place between both countries for decades. While a significant amendment in 2017 to the treaty had made capital gains on transactions in Indian shares taxable in India, it also exempted share purchases that were made before the change came into force. The Delhi High Court agreed with this view at the time. Last week’s ruling essentially strikes down this interpretation and makes all transactions vulnerable to being taxed in the country. The exact amount Tiger Global will have to pay the tax authorities is unclear, but some estimates suggest that tax plus penalties may be close to $1.5bn... 

The court said holding a tax residency certificate was not a “magic wand” that automatically bestowed the benefits of the treaty, and that Indian tax authorities could examine whether the structure of an investment had been created primarily to avoid taxes. In his concurring opinion, one judge wrote: “Taxing an income arising out of its own country is an inherent sovereign right. Any dilution of this is a threat to a nation’s long-term interest.” This signals that the court could take a similar approach if presiding over other investments. Foreign investors typically use Singapore, Mauritius, the Netherlands or other treaty jurisdictions to structure their investments into India. The supreme court’s order will force a rethink on this.

16. China is influencing the course of the Russia-Ukraine war by informally supplying drones to both sides. 

China already makes 70-80 per cent of the world’s commercial drones and dominates production of critical elements such as speed controllers, sensors, cameras and propellers, according to analytics provider Drone Industry Insights. That has made it a hidden fulcrum in the conflict. “It just puts into perspective how much control the Chinese actually have over the outcome of this war,” says Catarina Buchatskiy of the Snake Island Institute, a Kyiv-based military think-tank. “They could just choose to supply or not to supply the Ukrainians. I mean, the drone is such a definitive battlefield weapon now. It underlines how China has kind of evolved into a really influential player.” China’s Ministry of Foreign Affairs said the country had “always maintained an objective and just position on the Ukraine crisis” and had “never supplied lethal weapons to any party to the conflict and strictly controls the export of dual-use items, including drones”.

17. AI-related capex contributed as much to the US economic growth in H1 of 2025 as consumer spending, which makes up 70% of the economic output.

18. This sort of sums up Trump's presidency

Trump’s behaviour seems to be becoming even more erratic. Since the beginning of the year, he has staged a military operation in Venezuela; promised to intervene in Iran; threatened to annex Greenland; dispatched hundreds of masked federal agents to Minnesota; and launched law suits against the head of the Federal Reserve, Jerome Powell, and the head of JPMorgan, Jamie Dimon. That is in just three weeks and there are three years of his presidency left to go.