Weekend reading links

1. Europe too has its chokepoints over China and the US.

A group of experts called the Geostrategic Europe Taskforce last week published a report which “identifies 41 critical chokepoints where China depends on the EU for more than 80 per cent of its imports, and 67 such dependencies for the United States. These span essential inputs including insulin, pharmaceutical intermediates, medical technologies, and specialised machinery for agriculture, paper production, and industrial processing.” And the German economic think-tank Dezernat Zukunft has also just released a study highlighting that “Europe has more cards than it thinks. We control 80 per cent of US uranium imports. Siemens dominates the turbines US data centres desperately need.”

2. US and Western VCs are struggling to exit their China investments.

Ten of the biggest buyout firms with investments in China including KKR, Blackstone and CVC had zero publicly disclosed complete divestments from mainland Chinese portfolio companies in 2025, according to data from providers PitchBook and Dealogic.

3. Declining attention spans.

A 2022 survey by King’s College London found that 49 per cent of UK adults feel their attention span is shorter than it used to be. Forty-seven per cent feel “deep thinking” has become a thing of the past. Studies that monitor people’s attention in their real-world environment show that since 2004, the average time people stay focused on a single task has dropped from about 2.5 minutes to roughly 47 seconds, according to data tracked in Attention Span, a book by Gloria Mark, professor of informatics at the University of California, Irvine.

4. South Korean stock markets rose 76% last year to become the best-performing major market. 

Retail investors have bought a net Won6.3tn ($4.3bn) of locally listed stocks since the start of 2026, according to Korea Exchange, the country’s securities market operator. In addition, they have pumped Won13tn into Korean ETFs, helping boost the benchmark Kospi by 35 per cent this year and making it one of the world’s best-performing stock market indices for the second year running... The number of individual active stock trading accounts in Korea topped 100mn for the first time last month — the equivalent of roughly two accounts for every member of the population. Deposits held at retail brokerages, reserved for stock purchases, hit a record Won103tn this month, up from Won87tn at the end of last year. Margin balances (the funds investors have borrowed from brokerages to buy stocks) have also surged to a record at Won31.5tn.

5. The MAGA right and progressive left converge in their opposition to emerging AI trends.

AI opposition spans the political spectrum. Democrat Senators Bernie Sanders and Elizabeth Warren warn against corporate power concentration and job displacement, while Maga strategist Steve Bannon and Republican Senator Josh Hawley spread warnings about the dangers of empowering tech billionaires... The list of grievances being raised against AI is varied. At the local level, communities are fighting the construction of data centres that they worry will disrupt resources such as water, land and electricity... Meanwhile, in Hollywood, celebrities have launched the “Stealing Isn’t Innovation” campaign against the use of creative work for AI training, and parents, along with 37 state attorneys-general, are pressing for accountability after Grok, xAI’s chatbot, facilitated the generation of non-consensual nude images of women and children.

6. China announces restrictions on exports of rare earth magnets and other critical minerals, in the guide of "dual-use materials", to dozens of Japanese companies, especially vehicle makers.

7. Contrary to Elon Musk's claims that space-based data centres are three years away, they may be decades away.

Google’s satellite-based data centre initiative, Project Suncatcher, estimates that launch costs would need to fall below $200 per kilogramme (a sevenfold reduction from current levels) before this becomes economically viable. That threshold isn’t expected until the mid-2030s. Even if costs do fall, the components required — including radiation-hardened servers, on-orbit communications infrastructure and in-space servicing capabilities — do not yet exist at commercial scale. Adding to the conundrum, orbital data centres turn routine IT management into a complex space systems problem. On Earth, a failed server can be replaced in minutes. In orbit, that task requires either sophisticated in-space servicing or acceptance of degrading performance and stranded capital that becomes orbital debris as components age and fail. Burning satellites up when they become obsolete is not environmentally neutral: the process injects metal particles into the upper atmosphere where they can affect winds, temperatures and ozone chemistry.

8. On the importance of manufacturing for national economic development.

Most successful development stories — from Britain’s Industrial Revolution to South Korea’s transformation to China’s ascent — have run through the factory floor. Manufacturing drives productivity through economies of scale that services struggle to replicate. It generates innovation spillovers that ripple through entire economies. It enables countries to access global markets at a scale services cannot match. And contrary to fears about automation eliminating manufacturing jobs, countries like China demonstrate that manufacturing can absorb hundreds of millions of workers even as robots proliferate... Digital platforms, financial services, and business process outsourcing... cannot replace manufacturing’s role as the engine of sustained productivity growth and structural transformation...

Between 1750 and 1950, the West’s establishment as the world’s economic hegemon was fundamentally a process of becoming the world’s manufacturing hegemon. Since 1950, this pattern has persisted with remarkable consistency. A World Bank study published in 2008 identified 13 countries that sustained annual growth rates of 7% or higher for a period of 25 years or longer. Among these growth miracles, only two — Botswana and Oman, both small countries with highly idiosyncratic economic structures — achieved this without manufacturing-led development... recent data by the UN Industrial Development Organisation (UNIDO) arrive at similar conclusions. In their Industrial Development Report 2026, they highlight that 64% of growth episodes over the last 50 years can be directly attributed to manufacturing... Manufacturing firms spend heavily on research and development (R&D), generating strong innovation spillovers throughout the economy. In fact, manufacturing is attributed to 53% of global R&D activity. Manufacturing provides the material foundation for innovation, creates demand for new technologies, and enables the accumulation of productive capabilities that underpin further innovation.

9. Britain has a peculiar worsening trend in graduate fortunes. 

10. Good illustration of how regulations may be stifling European business environment. From Pieter Garciano

The whole point of the AI Act, is to create an extremely consistent and level playing field across all of Europe to allow like companies to face a much larger market straight away. The problem is that because of directives, the actual enforcement of a given law is left to the member state and the member states are ordered to create their own regulatory bodies. So for example, in the case of the AI Act, every single member state is ordered to have a notifying authority and an enforcement authority... these different regulators, they talk to each other, but they’re not necessarily forced to agree with each other... And so you have cases where the Irish regulations happened with GDPR, the Irish Data Protection Authority said to Meta, this is excellent. You can do X or Y. And then the Austrian and German data protection authorities disagreed and then fine Meta billions of euros. And so, this is a case where the law, even if you agree with the intent of the law, the way it’s currently being executed, which is through directives, makes it so that you’re going to always get an extremely high friction and fragmented regulatory system... They currently have, I think the count is between these four laws, they’ve created 270 different tech regulators... And that of course has really distortionary effects as well for what kind of basically very large fixed cost. And so if you’re a large company, if you’re a Google or a Meta, you have a thousand guys in your Brussels compliance office and they’re really good at this. But if you’re a smaller company, then you actually really struggle with figuring out what the 270 different bodies want you to do.

European regulators have been influenced by beliefs against big corporations and their market power, which explains both their anti-trust actions against Big Tech and refusal to approve European mergers like those between Siemens and Alstom.  

11. China is leading the race for humanoid robots, including those which resemble human beings and mimic their facial expressions while talking. This is a real advance.

Galbot’s silvery humanoid folds T-shirts, retrieves a bottle of water from a shelf and rolls walnuts about in its hands. Developing multifunctional hands has been a major challenge for robot makers, requiring advanced sensitivity and a high density of mechanical components. The Beijing-based company says its robots can be used for household tasks or in retail contexts such as shops and pharmacies... Galbot, backed by Chinese battery giant CATL, also showed its humanoid picking up irregular shards of broken glass, suggesting “integration of perception, grasp planning, and controlled force and precision, differentiating the performance from purely staged movement”, according to analysts at Morgan Stanley.

12. Is the National Green Tribunal (NGT), the primary appellate authority against orders of the Ministries of Environment of state and central governments, becoming a captive of ease of doing business?

Between 2020 and 2025, of the 329 appeals filed by citizens and activists against the grant of clearances by the Government, only in 20% (65 cases), did the NGT rule in favour of the appeal. Conversely, when the project’s proponents appealed against the denial of clearances by the government, in nearly 80% (126 of 160) of the cases, they secured relief. This is not a historical norm. Data from 2016-2019 shows a more balanced era where relief for both sides hovered between 18% and 31%. This pro-project trend has accelerated sharply in the last 24 months. Between 2024 and 2025, only 7% of appeals challenging clearances were successful. In contrast, 88% of industry-led appeals against clearance rejections got relief... of the 264 unsuccessful citizen appeals during 2020–2025, a significant portion was dismissed on technical grounds, labelled “time-barred” for more than 90 days delay in filing. The rest were dismissed as “not tenable,” or lacking “any merit.”

13. Excellent article by Richard Hurowitz on how gum arabic, a sap that comes from the acacia tree, is fuelling the civil war in Sudan, joining Sierra Leone's blood diamonds and DRC's cobalt in fuelling their respective civil wars. 

Found in everything from soft drinks and candy to cosmetics and pharmaceuticals, gum arabic is a critical ingredient for Coke and Pepsi and gives an M&M its distinctive shell. Commonly listed as E414 on labels, it’s an ingredient in pet food, chewing gum, lipstick, pill capsules and throat lozenges... the groves of Sudan’s subsistence farmers produce 70-80 per cent of the global supply. And no one has yet found an effective synthetic substitute. Sudan exported some 60,000 tonnes of its “white gold” in the year prior to the conflict. It is no surprise, then, that multinationals have been stockpiling gum arabic since the civil war started... 

It is also, tragically, being used to finance what the UN has declared the world’s worst humanitarian disaster. Since April 2023, Sudan has been engulfed in a civil war between the government in Khartoum’s Sudanese Armed Forces and the rebel Rapid Support Forces. The war has drawn in foreign powers including Saudi Arabia, the UAE, Turkey, Russia and Egypt... The crisis in Sudan dwarfs any other current conflict on every measure... According to a former US envoy, over 400,000 people have died. More than 15mn have been displaced. Tens of thousands of Sudanese have been massacred, there is widespread sexual violence and a man-made famine has sent millions into starvation... Both sides have used the commodity to finance their efforts... and the SAF continues to export what it can while the RSF smuggles its supplies abroad... The RSF controls large portions of the main gum-producing regions in Darfur and Kordofan where they have looted warehouses, seized shipments and imposed fees on harvesters and traders. Tens of millions of dollars’ worth of gum arabic has been stolen, smuggled and sold to finance their military operations. At the same time, the SAF controls Port Sudan, where taxes on gum arabic exports fill its coffers with revenue.

14. The killing of Nemesio Oseguera, the leader of Mexico's Jalisco New Generation Cartel (CJNG) has once again drawn attention to Mexico’s pervasive drug gang problem.

Weekend reading links

1. Indian students are the biggest consumers of foreign higher education,

According to Unesco, in 2017 there were 5.3 million internationally mobile students. China and India were the top two countries of their origin, and the US, Australia, and the UK the top destinations. In 2019, the number of Indians studying in the US crossed 202,014, or 18 per cent of all international students there. In Australia, 15 per cent of all international students were Indians. They were outnumbered only by the Chinese. In the UK (in 2018) Indians, at 19,750, were again the second-largest nationality among international students. In Canada, the largest number of international students on campuses was that of Indians, who accounted for 34 per cent of the total 642,000.

A survey by QS reveals that a majority of Indians prefer to study STEM (science, technology, engineering, and mathematics) subjects abroad, with 41 per cent of them choosing business & management, and 33 per cent engineering and technology. This choice is directly linked to employability abroad. It is easier to get jobs and work permits through these disciplines than with non-STEM subjects. In the US alone, 90 per cent of H-1B visa requests in 2011 were for jobs that required high-level STEM knowledge... Under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) education remittances (money going abroad for tuition fees only) were increasing in the past. In 2018-2019, education remittances were 25.9 per cent of the all outward remittances, (worth $13.8 billion). This increased to 26.9 per cent of the total (worth $17.4 billion) from April 2019 to February 2020.

2. Ashok Gulati argues in favour of focusing policy on reducing edible out imports,

On the agri-imports front, the biggest item is edible oils — worth about $10 billion (more than 15 mt). This is where there is a need to create “aatma nirbharta”, not by levying high import duties, but by creating a competitive advantage through augmenting productivity and increasing the recovery ratio of oil from oilseeds and in case of palm oil, from fresh fruit bunches. While mustard, sunflower, groundnuts, and cottonseed have a potential to increase oil output to some extent, the maximum potential lies in oil palm. This is the only plant that can give about four tonnes of oil on a per hectare basis. India has about 2 million hectares that are suitable for oil palm cultivation — this can yield 8 mt of palm oil. But it needs a long term vision and strategy. If the Modi government wants “aatma nirbharta” in agriculture, oil palm is a crop to work on.

The entire article is informative.

3. The World Bank's misguided Pandemic Bonds appears to have gotten its deserved burial. 

4. Another example of implementation failure, in the distribution of foodgrains to returning migrants,

Reports suggest that the government’s ambitious scheme of distributing free foodgrain to migrant workers during the lockdown period has not been effective. According to data released by the Ministry of Consumer Affairs, Food and Public Distribution, 11 states have distributed less than one per cent of the allocated quantities during the months of May and June. States and Union Territories have lifted 80 per cent of the free foodgrains (80 lakh metric tonnes) apportioned to them to distribute to an estimated 8 crore migrant workers over two months. However, according to the government's own data, only 13 per cent of this was distributed and benefitted only 2.25 per cent of the migrant workers.

5. The difficult of disengaging from China, this about the reliance of public sector units on Chinese contractors.

C Rajamohan has a very nice summary of the changing contours of Chinese foreign policy under Xi Jinping. He argues that the aggressive pursuit of its hegemony in Asia is likely to stoke nationalistic forces in its neighbours.

Shyam Saran on the consensus on bilateral relationship which has been irretrievably broken by the recent Chinese actions,

What were the key elements of this consensus. One, that India was not a threat to China and China was not a threat to India. Two, that there was enough room in Asia and the world for both India and China to grow. Three, India was an economic opportunity for China and China for India. And, four, that India-China relations had acquired a strategic and global dimension, thus enhancing the importance of strong and cooperative relations between them. Precisely for this reason, the two sides wished to seek a political resolution to their boundary issue so that they could work together on a series of global issues where they had convergent interest.

Good article by Jabin Jacob on the insecurities of the Chinese Communist Party which has in recent times opened up numerous fronts of battle for the Chinese regime.

Meanwhile the progress on disengagement remains elusive with the Chinese refusing to vacate the land encroached by them. Brahma Chellaney calls for active engagement at the border instead of the proposed disengagement since it would only involve India effectively vacating its own territory. 

6. A good snapshot of public views about China and US among populations of major countries,

A good summary of the multi-front battles that China has opened up in recent times as Xi Jinping pursues "wolf warrior" diplomacy.

7. Ground Zero for water wars, atleast in Africa, is the Grand Renaissance Dam built by Ethiopia on Blue Nile to generate 6000 MW of power, double the country's current installed capacity. The dam would have a storage capacity which is more than the volume of the entire Blue Nile river. Now that the construction is completed, Ethiopia is threatening to go ahead and fill the dam even as the possible tri-partite water sharing agreement with Egypt and Sudan has become entangled in protracted disagreements.

See also this report. 

8. The balance sheet of the power distribution sector reform program UDAY looks disappointing.

And signatures of success are all weak,

For example, at the aggregate level, financial losses of state-owned discoms rose by about 81 per cent in FY19. Further, the gap between the average cost of power purchased and supplied went up instead of improving. The aggregate technical and commercial losses have also not narrowed to the extent desired. Operational inefficiencies continue to mar discom finances and state government loans to discoms have more than doubled over the last five years.

The impact of accumulating power sector losses on state government liabilities is a matter of big concern,

The financial position of discoms has implications for state government finances. A new research paper by the Reserve Bank of India underlines the rising trend of off-budget borrowings by state governments. The majority of guarantees given by state governments are for borrowings in the power sector. On an average, power utilities account for over 60 per cent of total outstanding guarantees given by the states. In some states such as Uttar Pradesh, Tamil Nadu and Rajasthan, it is worth over 80 per cent of the total guarantees. The paper notes that if these guarantees are invoked, it would pose a potential risk to debt sustainability. However, at some point, state governments will have to foot the bill and take the liability on their books because discoms — given their financial position— would not be able to service the debt.

Into this pile of woes comes news that rating agencies have downgraded Power Finance Corporation to junk status, thereby impacting the cost of capital of one of the largest financiers to the distressed discoms.

This is not surprising since the strategy was never likely to work. The sector needs choices which demand trade-offs. I had outlined a minimal and essential agenda here.

10. As India pursues import substitution in the post-Covid future, ventilators are a good example of what is possible in such areas. With a determined push and strategic purchase commitment by the government, the worry of a deficit of ventilators has in three months turned into one of supply gluts.

But at the same time, ventilator capacity went up from about 300 per month from eight manufacturers to over 30,000 from 16 manufacturers, according to Rajiv Nath, Forum Coordinator of the Association of Indian Medical Device Industry (AiMeD)... Delhi-based AgVa Healthcare tied up with Maruti Suzuki India in March to ramp up production. The company’s co-founder Prof Diwakar Vaish says they have delivered one-third of their order of 10,000 ventilators. “We were initially given a moving target by HLL since specifications were subsequently changed. But we have managed to push production from 50-100 ventilators a month to almost 5,000. This has brought down the cost of ventilators for use in India to one-fifth of what was being paid earlier for imported machines,” he says.

The gluts have been exacerbated by the limited use of ventilators among Covid patients - just 3 per thousand having to use ventilators.

The two features of this transformation of the production capacity was strategic partnerships by manufacturers with the likes of public sector units and advance market commitment by the government.

Given the excess availability, this is perhaps an opportunity for India to allow exports and earn some goodwill.

11. From John Mauldin, observations on the unexplainable rise and rise of equity markets,

The Dow Industrials just closed out their best quarter since 1987... The S&P 500 rose 40% from its March 23 low—its strongest 100-day rally since 1933... But the latest AAII sentiment survey says only 22.2% of investors are bullish for stocks over the next six months. That’s a nine-month low and the third straight week of sub-25% readings... Tesla just bypassed Toyota to become the world’s most valuable car company. This after years of quarterly losses. But shares are up more than 5,500% over the past decade. Goes to show that, like “Hamilton,” investors love a good success story.

12. Fascinating account of how thieves organise their activities in Sierra Leone,

Like many clubs, it is selective. Only the right sort of person may join. It has a spokesman, a financial secretary and an interim chairman. But in other ways the Black Street Boys is rather different from, say, a club in Pall Mall or Augusta, Georgia. Members sport matching tattoos of the harp symbol used on bottles of Guinness. And instead of spending their days playing bridge or golf, the Black Street Boys talk about breaking into cars, picking pockets or robbing people at knifepoint. Before admission, “we’ll interview you, ask where you come from, what your motivation is and why you decided to come here and learn the ways of the streets,” says its interim chairman... There are hundreds of informal associations like these across the country. The youngsters who sell pirated cds in downtown Freetown answer to a chairman and vice-chairman, as do the beggars who loiter outside a hilltop supermarket in the west of the city. Neighbours band together and form committees to look out for one another. The chairmen mediate squabbles, punish thieves and drum up cash when members are sick. Some are corrupted by power and end up squeezing extra, undue payments from members. Such groups exist because the state is a shambles. According to a report last year by Transparency International, a Berlin-based watchdog, more than half of Sierra Leoneans paid bribes for public services. When officials are predatory, people turn to their communities for protection.

13. The leaders of most successful grand projects in history get more credit than they deserve. Post-facto assessments confer excessive praise and attribution. Sample this about Franklin Delano Roosevelt's New Deal which led US out of the Depression, 

FDR according to his biographer Robert Dallek, had no grand plan for rescuing America, only an “uncanny inexplicable feel for what might work and what would stimulate public approval”. Richard Hofstadter, a historian, describes an “era of fumbling and muddling through”.

14. Amidst all talk of easing business environment and attracting investors, Haryana reserves employment to locals,

The Haryana State Employment of Local Candidates Ordinance, 2020, is to provide a whopping 75 per cent reservation for locals in new jobs within the state in private concerns, subject to certain riders. These include that the new jobs should have a salary of under Rs 50,000; and that the company itself should have more than 10 people.

Apart from the inefficiencies and balkanisation of the labour market, it imposes additional compliances and its associated problems for businesses.

15. Snapshot of the frenetic front-loaded state government borrowings

16. In a summary of the all the global economic and social trends leading up to the Covid 19, Martin Wolf points to three determinants of citizenship in today's world,

In today’s world, citizenship needs to have three aspects: loyalty to democratic political and legal institutions and the values of open debate and mutual tolerance that underpin them; concern for the ability of all fellow citizens to lead a fulfilled life; and the wish to create an economy that allows the citizens and their institutions to flourish.

None of the leadership of the major businesses and financial market institutions in the US would meet the second and third aspects.

17. A fascinating FT investigation of the 'Ndrangheta mafia in the Calabria region of Italy. 

’Ndrangheta, a Mafia that remains little-known outside Italy but which has grown into one of the most dangerous, internationally active and financially sophisticated criminal enterprises in the western world. Over the past two decades, the leading families of the ’Ndrangheta — pronounced “en-dran-ghet-ah” — have expanded operations far outside their small home region. Today they control a large part of cocaine importation into Europe, as well as arms smuggling, extortion and cross-border money laundering. Several hundred autonomous clans have been transformed into one of Italy’s most successful businesses, with some studies estimating their combined annual turnover to be as high as €44bn — believed by law-enforcement agencies to be more than all the Mexican drug ­cartels combined.

This financialisation of Mafia activities is stunning,

Regular health service companies working for Italian hospitals are owed money by hospitals. Instead of waiting to be paid, they sell on the invoices at a discount. This helps them get cash upfront, but they lose a bit on what they are owed due to the discount. The buyers of these invoices package them up into a big pool of invoices inside a special purpose vehicle, SPV, and then sell bonds to investors backed by the invoices. The investors get paid interest on the bonds as the invoices are gradually paid off by the Italian health authorities. Intermediaries work to ensure the bills are paid, and the money flows from the health authority to the investor.

18. Shekhar Gupta points to the sociology of UP mafia. In a political system where government pack the system with people belonging to its caste coalition, the castes left out end up relying on the mafia. When the state had brahmin Chief Ministers, the mafia leaders belonged to the backward castes. In the recent decades as political power shifted, the mafia leaders were the upper castes. 

If a Yadav father or son is in power, it means the Yadavs have the power. That is only about 9 per cent of the population. They make an alliance with Muslims, and often with Thakurs. So, they are all accommodated in the legitimate power tent. All governance, distribution of welfare, including sinking of tube wells and hand pumps, appointment of the most important officers. The castes that feel left out then lean on their mafia leaders. This results in a counter-intuitive situation where the more active mafias usually consist of castes that are not in power. In the past, until the 1980s, when upper castes were usually chief ministers, crime syndicates and dacoit gangs were backward castes... Of course, once power in the state shifted to the lower and middle castes, including the Yadavs, upper castes moved to organised crime too. Brahmin and Thakur gangs came up now, while western UP became a lawless zone in its own right. The mafia the state is now dealing with in Kanpur is exclusively Brahmin.

19. From Calculated Risk via John Mauldin this unemployment graphic provides a perspective on the economic damage of Covid 19 in the US.

The larger point in the article about a permanent shock to the labour market is very compelling and likely. The Economist had talked about the 90 percent economy, where only 90% of the economic activity resumes after Covid 19. 

Weekend reading links

1. Very good survey in The Economist on the future of the aviation industry. This in particular is a great summary of the science and the commerce behind the manufacturing process of a passenger aircraft.

Each of the finished planes sits at the apex of a system of supply chains which fans out across the world, bringing 3.5m components together into a single product. An A 350’s airframe is composed of seven sections. Three are assembled into the fuselage, two being made at another site in France and the third in Germany. The two wings are made in Britain, then transferred to Germany to be finished. The tail fin and the horizontal-stabiliser assembly are made in Spain. All of these pieces are flown to Toulouse in special transport aircraft called Belugas—after the whale, which they resemble, rather than the sturgeon, which they do not. They are made, mostly, of carbon-fibre-reinforced plastics (CFRPs). These are composite materials that cannot be riveted in the way metal is because of the damage this causes to the fibres. They are therefore held together by lock-bolts inserted through 10,000 specially drilled holes in the flanges where the sections overlap.

Connecting the sections involves fitting them together, drilling the holes (a process less damaging than riveting), unfitting them, cleaning the holes and surrounding areas of debris, applying a sealant to the flanges, fitting the pieces back together again and then inserting the lock-bolts. At this point the myriad cables which keep a modern aircraft flying, and which have been pre-fitted into the airframe sections, are linked up. Before their final bonding, however, the fuselage sections have had what are known as “monuments” installed. These are bits of equipment—galleys, crews’ quarters and so on—that would be too big to carry through the cabin doors later. Afterwards, the rest of the fitting-out is done, the plane is painted in the customer’s livery and the crucial finishing touches, a pair of engines, one under each wing, are added. The whole process takes about a month.

2. This summarises the giant leap made by the mobile phone market in India,

In 2014, the cost of one GB of mobile data was ₹270. Now, it is ₹10 per GB. As a result, mobile data consumption has soared. In late-2014, an average user on Airtel’s network (India’s largest telecom operator back then) used 622 megabytes (MB) of data in a month. By late-2018, the number of users had tripled, but, despite a broader base, average data usage stood at 10GB a month.

The Economist has a good briefing article on how entertainment is driving the penetration and use of internet, and India leads this trend - "internet is the leisure economy of the world's poor"or "timepass". 

“Timepass” is the essence of the internet. The vast majority of the top 25 apps by revenue in both Google’s and Apple’s app stores are games (and both companies announced new paid gaming services this year). Tencent became one of China’s internet giants because of games. Facebook grew into the world’s sixth-most valuable company by giving people a place to “do timepass”. YouTube is the gateway to several lifetimes’ worth of timepass. The fastest-growing new apps of recent years have all been aimed at timepass: Fortnite, WhatsApp, Instagram, Snapchat. TikTok, which consists of 15-second videos, is timepass in its essence, made by bored kids in mofussil towns who have found vast audiences by doing silly things.

In fact, India has the cheapest mobile internet in the world, nearly 48 times cheaper than the US to download a GB of mobile data!

3. IndiaSpend has a good series on informalisation of labour market in India. This and this covers the trend of contractualisation whereby firms prefer to contract than recruit workers, allowing them to skimp on benefits and statutory payments and keep wage costs down. This covers the fate of the 1.5 million people employed by ride-hailing providers,

Our interviews with workers... revealed that many of them were migrants to the city and spent long hours on the job to earn incentives to be able to send savings back home or make their existence in their adoptive city a bit more comfortable. They had little or no employment benefits such as insurance, and complained that their incomes were declining... All drivers for app-based cab companies complained about falling earnings due to increased competition--more and more cabs are plying every day.

4. The fastest growing retail activities in UK are the classic non-tradeables,

The article itself is a very good account of the disappearance of retail shops,

Technology will continue to transform shopping, and there are some good arguments for embracing this. Why shouldn’t people have easier lives, if the fridge tells you when it is on the last yoghurt and the supermarket delivers an hour after you’ve ordered on its website? The reason isn’t obvious: it will reveal itself only slowly, as the gift of sociability that shops give for free is withdrawn... The disappearance of shops, where the commercial exchange can be encased in a social one, will be something of a disaster if nothing of equal social use takes their place.

5. Jarrod Kimber revives the dying art of great cricket writing with this beautiful article.

6. Hubert Horan nails the Uber story, taking on the sustainability of its business model, cost structure, and commercials. This is a good summary,

An examination of Uber’s economics suggests that it has no hope of ever earning sustainable urban car service profits in competitive markets. Its costs are simply much higher than the market is willing to pay, as its nine years of massive losses indicate. Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business... Uber pursued a “growth at all costs” strategy financed by a staggering $20 billion in investor funding. This funding subsidized fares and service levels that could not be matched by incumbents who had to cover costs out of actual passenger fares. Uber’s massive subsidies were explicitly anticompetitive—and are ultimately unsustainable—but they made the company enormously popular with passengers who enjoyed not having to pay the full cost of their service. The resulting rapid growth was also intended to make Uber highly attractive to those segments of the investment world that believed explosive top-line growth was the only important determinant of how start-up companies should be valued. Investors focused narrow­ly on Uber’s revenue growth and only rarely considered whether the company could ever produce the profits that might someday repay the multibillion dollar subsidies... Uber’s longer-term goal was to eliminate all meaningful competition and then profit from this quasi-monopoly power... Uber’s most important innovation has been to produce staggering levels of private wealth without creating any sustainable benefits for consumers, workers, the cities they serve, or anyone else...

This is not a case of a company with a reasonably sound operating business that has managed to inflate stock market expectations a bit. This is a case of a massive valuation that has no relationship to any economic fundamentals. Uber has no competitive efficiency advantages, operates in an industry with few barriers to entry, and has lost more than $14 billion in the previous four years. But its narratives convinced most people in the media, invest­ment, and tech worlds that it is the most valuable transportation company on the planet and the second most valuable start-up IPO in U.S. history (after Facebook). Uber is the breakthrough case where the public perception of a large new company was entirely created using the types of manufactured narratives typically employed in partisan political campaigns. Narrative construction is perhaps Uber’s greatest competitive strength. The company used these techniques to completely divert attention away from the massive subsidies that were the actual drivers of its popularity and growth. It successfully framed the entire public discussion around an emotive, “us-versus-them” battle between heroic innovators and corrupt regulators who were falsely blamed for all of the industry’s historic service problems. Uber’s desired framing—that it was fighting a moral battle on behalf of technological progress and economic freedom—was uncritically ac­cepted by the mainstream business and tech industry press, who then never bothered to analyze the firm’s actual economics or its anticompetitive behavior.

And even the less worse (albeit heavily red) bottomline comes from squeezing driver pay,

If Uber drivers still received their 2015 share of each passenger dollar, Uber’s negative margins would still be in the triple digits... Starting in 2015, Uber eliminated most of the incentives it had used to attract drivers and unilaterally raised its share of passenger fares from 20 percent to 25–30 percent. Almost all of Uber’s margin improvement since 2015 is explained by this reduction of driver compensation down to minimum wage levels, not by improved efficiency. These unilateral compensation cuts resulted in a direct wealth transfer from labor to capital of over $3 billion.

7. Pramit in Livemint has a graphical summary of the ongoing controversy over Indian GDP statistics.  

8. Fascinating article on kidnapping and ransom insurance, with its 20 odd firms operating out of Lloyds of London. This captures the essence of how it is able to get kidnappers and insurance providers to work together,

"It's a one-off transaction between the family and the kidnapper, but it's a repeated interaction for the insurance market."

9. Ananth points to a very good article by Andy Mukherjee with actionable proposals (a refreshing change from the general 36000 ft ideas that oped writers typically offer) to address the liquidity squeeze that is being faced in India's shadow banking sector. While the suggestions are all logical, the problem is with getting the government too deep into solving these problems. For example, the incentive distortions likely with a government sponsored refinance facility are numerous. 

Weekend readings

1. The story of Boeing and the apparent failings in the design of its flight-control software is yet another example of the limitations of outsourcing regulation. Sample this,

The FAA has let technical experts at aircraft makers act as its representatives to perform certain tests and approve some parts for decades. The FAA expanded the scope of that program in 2005 to address concerns about adequately keeping pace with its workload. Known as Organization Designation Authorization, or ODA, it let Boeing and other manufacturers choose the employees who approve design work on the agency’s behalf. Previously, the FAA approved each appointment. Under the new approach, which was fully implemented in 2009, the ODA representatives are still under U.S. legal requirements and the FAA has the authority to oversee them and request that their management be changed. In 2012, a special investigator of the Office of Inspector General at the Department of Transportation sent a memo to the FAA’s audit chief warning him of concerns voiced by agency employees about the new process. Some allegations were made in anonymous faxes sent to the inspector general’s office, and the office followed up by interviewing employees in the FAA’s Transport Airplane Directorate. “Our investigation substantiated employee allegations that TAD and FAA headquarters managers have not always supported TAD employee efforts to hold Boeing accountable and this has created a negative atmosphere within the TAD," according to the June 22, 2012, report sent to the FAA.

The employees told the investigators that managers had overturned a recommendation by staff to remove the administrator Boeing had chosen for the program and “had not adequately addressed employees’ concerns" about potential conflicts of interest, the memo said. The employees, it said, viewed this as evidence of management having “too close a relationship with Boeing officials." Despite those concerns, as well as others raised in a subsequent report by the inspector general, Congress has embraced the program as a way to improve the FAA’s efficiency. President Donald Trump signed into law a change on Oct. 5. It allows manufacturers to request that the FAA eliminate limitations on how company representatives certify “low and medium risk" items, giving them even more authority over their own products.

2. FT on the role of militias in Rio's favelas,

At first, militias offered protection to local businesses at a modest price many were willing to pay. From there to extortion was a short step, and soon militias were selling protection against themselves. They expanded into other services: informal public transport, distribution of cooking gas, pirate cable TV, the sale and rental of commercial and residential property, and more. The most lucrative line of business for the militias has been real estate. Investigators recently found documents at the residents’ association in Rio das Pedras showing that between 5 per cent and 10 per cent of the value of every property deal goes to the local militia. They were also involved in the hugely profitable business of land expropriation or grilagem — the fraudulent assignment of property and land deeds... militias dominated local politics in the areas they controlled... 

During the past 20 years, many new militias have been formed beyond Rio das Pedras. A study last year found they were present in 165 favelas and in 37 other city neighbourhoods in greater Rio, areas of the city that are home to a combined population of more than 2m people. They hand out often gruesome and lethal justice designed to set an example, sometimes for criminal behaviour, sometimes for acts of disobedience such as buying cooking gas from the wrong distributor. Their presence haunts the city

The hardline policies of the new President Jair Bolsonaro is apparently worsening the situation.

3. Talk about regulatory arbitrage - social media platforms edition. How about reaping all the benefits of a publisher without legally being a publisher? This dichotomy is fast becoming apparent as Facebook faces increasing scrutiny over the content posted on its site,

Why on earth do we tolerate technology that can be used to inflame hatred and normalise violence at lightning speed and global scale? The answer lies largely in a 26-word sentence in Section 230 of the Communications Decency Act passed by the US Congress in 1996. “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” it states. So the likes of Facebook, Google and Twitter can play by different rules to traditional media companies, including the FT, which are legally responsible for all the content they publish. Jeff Kosseff, author of The Twenty-Six Words That Created the Internet, argues that Section 230 has proved an “awesome benefit” for the tech platforms. It has encouraged astonishing innovation and accelerated the growth of some of the richest companies on the planet. But it has also allowed billions of people to post anything they like online with almost no constraint. Some of that content is inspirational, much of it trivial, and a small sliver grotesque and harmful.

4. Amidst the Varsity Blues scandal of university admission frauds in the US, here comes more evidence of how skewed access to elite universities has become,

at the very best schools, more students come from the top 1 per cent of income distribution than come from the entire bottom 50 per cent.

 5. The latest issue of The American Statistician makes a strong plea in favour of revisiting the interpretation of 'statistical significance',

we should never conclude there is ‘no difference’ or ‘no association’ just because a P value is larger than a threshold such as 0.05 or, equivalently, because a confidence interval includes zero. Neither should we conclude that two studies conflict because one had a statistically significant result and the other did not. These errors waste research efforts and misinform policy decisions.

6. A data journalist at The Economist delves into a few graphs from the magazine and shows how they could be misleading or confusing or failing to make the point, and suggests some alternative illustrations.

7. Finally, US exports of LNG has surged spectacularly since the opening of the Sabine Pass terminal. With another three expected to come online soon, these exports are expected to keep rising and putting a downward pressure on global gas prices.

8. The Economist has this on Chinese locomotives and rolling stock manufacturer CRRC, 

CRRC now employs 180,000 people worldwide and posts annual revenues of $30.6bn, around a tenth of which comes from outside China. Between 2013 and 2017 crrc made 44% of the world’s electric trains and a whopping 71% of its high-speed ones, estimates Maria Leenen of sci Verkehr, a railways consultancy in Hamburg.

Predictive policing to deter crime

From the Economist Technology Quarterly,

Crime does not occur randomly across cities; it tends to cluster. In Seattle, for instance, police found that half of the city’s crime over a 14-year period occurred on less than 5% of the city’s streets. The red squares in Foothill district cluster around streets near junctions to main roads—the better to burgle and run while homeowners are at work—as well as around businesses with car parks (lots of inventory, empty at night) and railway stations. Burglars who hit one house on a quiet street often return the next day to hit another, hence the red squares.

The reference is to PredPol, a leading crime prediction software, which is used in Foothill and other districts across the LAPD, and each red square represents 2.3 hectare.  

Such algorithmic applications have two use cases - one to monitor the policeman's performance by measuring arrests and other specific actions, and second to deter crime by increasing surveillance and patrolling in high-risk areas. 

It may be the second use case that carries greater relevance for police districts in developing countries. Instead of focusing on punitive actions and personnel performance management, supervisory officials could focus attention on whether resources are being deployed in line with the diagnosis generated by the algorithms so as to deter crime. While the counter-factual of crime prevented is not easy to comprehend or communicate, this is a more sustainable and appropriate approach to using such applications, especially in the early stages.

I am reminded of the story of the Municipal Commissioner who used a similar approach to get the public health staff to keep the city clean. Sanitation in cities is critically dependent on night-sweeping of main roads and early morning garbage lifting, and cleaning of roads and open drains. It is therefore a practice for good Municipal Commissioners to make early dawn surprise rounds of the city streets. Though the Commissioner rarely ventures out of his car during the couple of hours of morning rounds, the likelihood of a surprise round by the Commissioner (or his/her easily recognisable car) has a powerful effect in keeping the public health workers on their toes.

Some of the more enterprising Commissioners, instead of waking up early in the morning, would send out just their vehicles with instructions to the driver to randomly cover a few streets! The galvanising effect was just as same! The same could apply to Police Commissioners making surprise night patrols. Anecdotally at least, in weak capacity systems, one could argue that Commissioners (Municipal and Police) who make shirking and non-compliance costly are among the most effective officers.

Signalling and deterrence are powerful forces in disciplining weak capacity systems and keeping order.

Analysing the market in kidnappings

Fascinating article by Anja Shortland that seeks to explain the motivations and dynamics of the market in kidnappings, 

The first principle that insurers adopt is that safe retrieval of hostages is paramount. The second guiding principle is that kidnapping cannot become too wildly profitable, for fear of further destabilization. In the language of economists, there must be no “supernormal profits.” If victims’ representatives quickly offer large ransoms, this information spreads like wildfire and triggers kidnapping booms... Insurers have therefore created institutions to make sure that ransom offers meet kidnapper expectations and produce safe releases but that do not upset local criminal markets... Because insurers can communicate outcomes confidentially, they can stabilize ransoms — as well as discipline rogue kidnappers. One kidnapper summarized this perception in the criminal community as “No one negotiates with a kidnapper who has a reputation for blowing his victims’ brains out.” Crisis responders also manage the ransom drop, removing a further obstacle to a successful conclusion. About 98 percent of insured criminal kidnapping victims are safely retrieved.

Of course, this “protocol” for ransom negotiations is costly. Tough bargaining takes time, imposing huge psychological costs on negotiators and on the victim’s family and tying up productive resources in firms. Experienced consultants are paid a substantial daily fee. It is very tempting to conclude negotiations early. Most of the cost of quick ransoms that are bigger than they ought to be is borne by future victims and their insurers, not the current victim’s stakeholders...

It would be impossible to prove beyond reasonable doubt that an insurer’s crisis responder deliberately cuts corners because ransoms are naturally variable. This makes it impossible for insurers to formally contract with each other and punish those who “overpay” kidnappers. Insurers resolve this through an ingenious market structure. All kidnapping insurance is either written or reinsured at Lloyd’s of London. Within the Lloyd’s market, there are about 20 firms (or “syndicates”) competing for business. They all conduct resolutions according to clear rules. The Lloyd’s Corp. can exclude any syndicate that deviates from the established protocol and imposes costs on others. Outsiders do not have the necessary information to price kidnapping insurance correctly: Victims are very tight-lipped about their experiences to avoid attracting further criminal attention. The private governance regime for resolving criminal kidnappings generally delivers low and stable ransoms and predictable numbers of kidnappings. Most kidnappings can be resolved for thousands or tens of thousands of dollars. This makes profitable kidnapping insurance possible. When the protocol fails, insurers sustain losses and must innovate to regain control.

This should count as one of the very rare examples of how the market has addressed the co-ordination problem that is pervasive in such situations. 

Weekend reading links

1. On the US Pharma industry,

A recent Plos One study found that about 36 percent of all new drugs approved in the United States between 1988 and 2005 were protected solely by secondary, or trivial, patents.

2. The arms ocean that US is,

There are as many as 8.2m assault-style weapons at large in the US, which almost certainly exceeds that of any uniformed armoury in the world, barring the Russian and Chinese militaries. That is without mentioning the more than 300m estimated smaller firearms in US homes.

3. Is Uber leading a race to elimination in the car aggregator market? The company plans to undertake more fund-raising, bringing its total mobilization to $15 bn since starting out in 2009 and its valuation to $68 bn, and it has no plans in the foreseeable future to go public. To put this in perspective, when Amazon went public in 1997, it raised $54 million and was valued at $438 million! So what is the game plan?

Every time Uber raises another $1 billion, venture capital investors and others may find it less attractive to back one of Uber’s many rivals: Didi Chuxing, Lyft, Gett, Halo, Juno. In other words, Uber’s fund-raising efforts have seemingly become part of the contest: It’s not just a rivalry over customers and drivers; it’s a war of attrition, a mad scramble to starve the competition of cash. At the moment, Uber’s success has had the opposite effect: It has spawned a long list of rivals, big and little guys who say, “We can do it too.” But over time, as the smaller competitors run out of cash — after heavily subsidizing riders in an effort to steal business from Uber — venture capitalists should be less inclined to put up even more cash to go up against Fortress Uber. 

Uber’s fund-raising arms race comes against the backdrop of falling valuations for many Silicon Valley unicorns — private companies worth $1 billion or more. So there’s clearly a rush to take the money while it’s still available... So far, Uber is clearly winning the valuation game: It is worth more than virtually all of its rivals combined... Uber is currently on track to lose about $2 billion annually in China and India as it heavily subsidizes customers and drivers to gain market share.

This is clearly a race to the bottom, where only those with enough firepower will survive. But the end game could turn out different than anticipated, especially if the markets itself shrinks considerably once the subsidies are removed. 

4. More on this from this fascinating essay on Uber's challenges in China, where Didi Kuadi dominates, and where ride-sharing apps and aggregators are still not fully legal, and Uber China is an independent entity,

Typically, Uber takes a cut of about 25 per cent of the passenger’s fare and passes the rest of the fare on to the driver. Costs are kept low because Uber doesn’t employ the drivers, or own the cars. However, in China, Uber pays drivers a multiple of the passenger’s fare, meaning that the company loses money on most rides. Other Chinese ride-hailing companies employ a similar strategy... Many drivers for Uber say they would not be driving if it weren’t for the bonuses, while passengers also say they would ride less if the services became more expensive... While Uber’s services include luxury cars, cheaper rides are a bulwark of Uber’s business in China. Uber’s carpool service, with fares as low as Rmb2 (21 pence) accounts for more than half of rides in several key cities... removing subsidies altogether will not be easy. Examples from other markets show that heavily subsidised businesses sometimes just evaporate once the subsidies disappear. The taxi-hailing business of Didi and Kuaidi, which was initially fuelled by subsidies, is now a tiny fraction of their merged business and generates no revenues. Smaller ride-hailing companies in other markets, such as EasyTaxi in Jakarta, found that their business dried up completely when subsidies ended.

5. Livemint points to an India Ratings report on the asset quality of the country's top 500 corporate borrowers. It classifies their loans into four categories - stressed, elevated risk of refinance (ERR), medium ease of refinance (MER) and high ease of refinance (HER). The stressed loans form a counter-party to the Rs 5.8 trillion stressed loan book of the country's banks as on end-March 2016. The report says,

240 of the top 500 borrowers belong to the stressed and ERR (elevated risk of refinance) categories and will remain exposed to significant refinancing risk during FY17. These 240 borrowers hold about 42% of the total outstanding debt of Rs.28.1 trillion i.e. Rs.11.8 trillion, of which Rs.5.1 trillion is stressed and another Rs.6.7 trillion falls in the ERR (elevated risk of refinance) category

 And the larger share of refinancing requirement in 2016-17 is for stressed and ERR loans.

6. Livemint, again, points to the elevated debt to equity ratios and decadal low of return on equity on 303 manufacturing firms in the BSE 500.

One observation from this is that indebtedness is pervasive among the country's corporate and not the exclusive preserve of infrastructure firms.

7. Livemint feels that the "key to affordable and egalitarian housing ought to unlock India’s vacant houses first". As per census 2011, there were 2.47 vacant houses in India, or 90% of the number of rented houses in the country.

8. The Times points to the latest EPI study of income inequality in the US. The picture is very alarming.

Between 2009 and 2013, for example — a period that encompasses most of the post-Great Recession era – the top 1 percent captured all of the income growth in 15 states (Connecticut, Florida, Georgia, Louisiana, Maryland, Mississippi, Missouri, Nevada, New Jersey, New York, North Carolina, South Carolina, Virginia, Washington and Wyoming)... In all, the top 1 percent in the United States captured 85.1 percent of total income growth from 2009 to 2013. In 2013, the 1.6 million families in the top 1 percent made 25.3 times as much on average as the 161 million families in the bottom 99 percent. Those and other figures are reminiscent of conditions in the Roaring Twenties. In 1928, the peak year of that decade’s boom, the top 1 percent took home 24 percent of the nation’s income. In 2013, the top 1 percent nationally took home 20.1 percent of all income, while in five states (New York, Connecticut, Wyoming, Nevada and Florida) the income share for the top 1 percent exceeded the peak from 1928.

9. Bloomberg points to the shifts in the source and volume of US oil imports.

While Canada has become the country's largest source of oil imports, Middle East continues to play an important role.

10. The World Bank's latest report on Private Participation in Infrastructure (energy, transport, and water projects) in low and middle-income countries reveals that total investment in 2015 was $111.6 bn, compared to $111.7 bn in 2014 and $124.1 bn over the previous five years. Transportation and energy, as usual, dominated the investment destination by sector. Excluding Brazil, China, and India, investment rose 92%, on the back of Turkey’s US$35.6 billion IGA Airport (New International Airport) investment commitment. Solar energy investment rose 72% over the previous five-year average to reach US$9.4 billion and renewables captured nearly two-thirds of energy investments with private participation.

11. Ian Bremmer has this nice illustration of the web of geopolitical relationships in the Middle East.

12. Finally, on the Brexit vote, one commentator in the FT draws attention to the class divide by arguing that "the lower down the social and educational ladder you descend the greater likelihood that someone will have voted to Leave, while the best markets for Remainers is having a degree and being aged 18-29". This class divide largely replicates itself in the rise of people like Donald Trump and anti-Establishment and Far Right parties across continental Europe. But the British vote must be among the most surprising outcomes of the populist backlash against globalization, cross-national integration, and economic liberalization.

In any case, now the challenge would be about firming up the British relationship with the EU. In order to send out a strong signal to potential similar exits, the EU leaders would want to ensure that the costs of an exit are prohibitive enough. An accommodative exit for UK could encourage similar movements in other member countries. Here is a good graphic of the options available.

Another concern would be the dynamics of independence movements in Scotland, surely, and maybe Northern Ireland. The Brexit vote could well be the starting of the dissolution of the United Kingdom.

While the British exit would undoubtedly set back the European project, if the continent can weather it without further member exits or substantive reversals, it may well strengthen the Project's multi-track pathway towards integration.

Weekend reading links

1. Is this the tipping point in the growth versus sustainability debate with regard to energy? From the Times

Last year, Germany, the world’s fourth-largest economy, reached a milestone by reducing its overall energy consumption while still recording modest economic growth of 1.5 percent, breaking a traditional pattern in which nations see their energy use fall only during recessions. The share of renewable energy use has continued to rise as the use of fossil fuels has fallen — all while tempering the concerns of industry about rising costs and maintaining global competitiveness...

Germany has already realized its goal of increasing the share of power generated by solar, wind and other renewable sources, without hurting industry or plunging the nation into darkness. Last year, those energy sources accounted for 27.8 percent of all power consumed, for the first time edging out lignite, or brown coal, the country’s favorite fossil fuel. The national goal for renewables is 35 percent by 2020.

But the immense political and social consensus required for this may not be possible in many countries,

Since 2000, across party lines, German governments have passed laws and set regulations encouraging the production of solar, wind and bioenergy, in a program known as the Energiewende, or Energy Transition. At the same time, businesses, enticed by subsidies and prodded by Berlin, have worked with researchers on new ways to improve efficiency. The foundation for the entire effort has been the support of German citizens, who have been willing to shoulder the burden of increased costs in the short-term, in the long-term hope of leaving their children with a cleaner, more sustainable system... German consumers are being asked to bear much of the price of the energy transition, which the government projects will be at least 550 billion euros, or about $597 billion, by 2050, in order to shield energy-hungry heavy industry from higher costs. This has left households with far higher electricity rates than their counterparts in most other countries... electricity prices for a three-person household have risen 68 percent since 1998...Yet public support remains strong. A survey by TNS Infratest pollsters this year showed a strong majority of Germans continue to back the energy transformation effort, with 67 percent saying they favored the government’s policies.

In most countries, including all developing ones, since consumers are loath of pay the associated higher costs and businesses fear losing their competitiveness, governments prefer to stay away from such policies.

2 Amidst the stories surrounding El Chapo's dramatic recapture, the Times has a fascinating expose of the rising trend of violence against Mayors by Mexico's drug lords,

Hired killers, known as sicarios, have killed almost 100 mayors in Mexico in the last decade... The cartel makes telling demands of the mayors — for example, contracts for valuable building projects or the right to name the town police chiefs. And they are forcing mayors to give them 10 percent of their annual budgets. As Mexico’s government provides much of the financing, this means the cartels are feeding from the federal pot.. a year in drug-war aid. Corruption in Mexico is as old as the country itself, and traffickers have been bribing politicians during the century that they have been smuggling drugs to Americans. Mayors, governors and federal officials have turned a blind eye to opium fields and meth superlabs... 

But now gangsters are flipping this century-old deal. Instead of handing out bribes, they are making the mayors pay them. Politics is not just a way to help their criminal businesses; it is a business in itself. And as they take control of these politicians, the cartels transform themselves into an ominous shadow power, using the tools of the state to affect anyone who lives or works in its jurisdiction. With more than 2,000 mayors in Mexico, most of whom have little protection, the cartels have a big market to tap. The combined booty is potentially worth billions of dollars a year... Sometimes cartels cut out the middleman and put one of their own directly in the town hall. This was allegedly the case in the Guerrero city of Iguala, whose mayor, José Luis Abarca, is now in prison on organized crime charges, accused of being a member of Guerreros Unidos. Dozens of his police officers are also in jail, accused of being sicarios in uniform.

3. The graphics below captures the scale of China's explosive surge the debt to GDP ratio among non-financial corporates,

... and financial sector corporates.

The charts also show that local government debt has been driving up Chinese debt ratio; worsening balance sheets of local government state-owned enterprises; and raising the debt burdgen of commodities-related firms so much so that they rose from very few firms with interest payments higher than earnings in 2007 to more than half the firms having interest payments twice their earnings. 

4. Edward Glaeser reviews Robert Gordon and asks,

Will the best brains of the future build anything resembling our past innovations, or will they dedicate their time to tasks like making Twitter more user-friendly?

He also captures Gordon's central finding, 

He splits American lifestyles into core categories—food, shelter, clothing, health, transportation—and shows the revolution in the lives of ordinary Americans. Concentrating on the core needs of human existence rather than on coarse GDP statistics, he... helps us to understand the magnitude of the shift between 1870 and 1940... The world of 1940 is much closer to the world of 2010 than it is to the world of 1870. While almost every aspect of life changed between 1870 and 1940, the alterations from 1940 to 2010 came in particular areas.

5. Fascinating profile of Richard Posner which captures his concept of 'legal pragmatism' (as against 'legal formalism') as a 'judicial balancing of costs and benefits' through an 'economic analysis of law',

Posner describes legal pragmatism as a “practical and instrumental” application of that attitude. It is: “forward-looking, valuing continuity with the past only so far as such continuity can help us cope with the problems of the present and of the future;” “empirical,” focused on facts; “skeptical,” doubtful that any decision, legal or otherwise, represents “the final truth about anything” because frames of reference change over time; and “antidogmatic,” committed to “freedom of inquiry” and “a diversity of inquirers”—in other words, to the “experimental”—because progress comes through changes in frames of reference over time, “the replacement of one perspective or world view with another.”

6. Praveen Chakravarthy and Rajeev Gowda strike a note of caution on Startup India arguing that start-up scene in India is already flourishing without any government role,

Over the last 10 years, in India, $60 billion has been invested in more than 3,000 new start-ups. Indian start-ups received nearly 50 times more venture capital in 2015 compared to 2000. In 2015, venture-capital investments in India were higher than net foreign investments in stock markets for the first time in history, leaving out the global financial crisis years. Venture-capital financing for Indian start-ups has grown at a compounded rate of 30 per cent over the last 15 years. India already has the third largest start-up ecosystem in the world, boasting of more than 12,000 active start-ups. That there is a thriving and growing private venture-capital industry for providing risk capital to start-ups in India is quite evident. It is then inexplicable that the government should seek to squander away scarce tax rupees in the garb of providing a funding impetus to the start-up ecosystem — when, clearly, there are worthier claimants such as issues of rural distress, bad loans in the banking sector, and distraught power sector finances.

7. Times reports on the perils of rapid expansion with the example of Chinese ship-builders,

Up and down the Chinese coastline, in harbors and along coastal rivers, companies bought big plots of land, purchased cranes, and hired large numbers of welders. China expanded from one-fifth of global shipbuilding capacity in 2008 to two-fifths by last year. Quality control was a problem from the start. “In China, building what are supposed to be two identical ships in two adjacent slips, you get two different vessels,” said Basil Karatzas, a Manhattan ship broker. “In Japan, they can build 10 ships and they are all the same.”

With many Chinese shipyards dogged by complaints, competition was fierce. Japanese and South Korean shipyards demanded 20 percent down payments for orders, plus a guarantee from an international bank to pay the rest of the cost if the buyer defaulted. Although Chinese shipyards demanded the same deposits, they did not require the guarantees, and accepted orders from what were effectively shell companies with weak finances. That put Chinese shipyards at risk... F

or the 58,000-ton bulk freighters that Chinese shipyards were churning out, prices have plunged from nearly $30 million in 2013 to just $16 million now. Buyers who bought at the high end chose to forfeit their deposits instead of paying for finished vessels worth less. Chinese shipyards are now littered with half-finished shells, like immense steel earthworms cut in two. Many shipyards lack the money to complete vessels and sell them at a discount that might allow them to recover some costs.