Weekend reading links

1. China's effect on solar power in a graphic.

At the turn of the millennium, solar panels cost $5-$6 per watt of generation capacity. Today, they sell for around 12 cents per watt, a level described as “offensively cheap” by Dave Jones, co-founder of think-tank Ember. That reduction is entirely the result of an explosion in China’s production capacity, which, according to research firm Wood Mackenzie, stands at roughly 1.36 terawatts, even as Beijing tries to rein in output to combat price deflation.

And rooftop solar generation is causing a loss of good customers across utilities, triggering a 'utility death spiral'. 

Shoprite, Africa’s biggest supermarket group, says the company could “power an entire suburb” with the panels it has been installing on its roofs and trucks in South Africa and Namibia since 2015. But what has been good for Shoprite, which now has around 43MW of peak capacity at its disposal and is looking at battery storage, constitutes a problem for state power utility Eskom. It estimates that rooftop solar panels and batteries, mostly installed by businesses and wealthier customers in response to years of rolling blackouts, were responsible for around 7 per cent of the 11.7 terawatt-hour reduction in its electricity sales for the year ending March, compounding a sharp fall in industrial use exacerbated by high prices. 

The lower revenues come as Eskom needs to fund the upkeep of the grid, which allows households to export electricity during the day, and the power stations that fill the generation gap when it’s dark or cloudy, or when power stored in batteries is insufficient to meet demand. “Everyone who has rooftop solar in any major city, they are still connected to the grid,” says its chief executive, Dan Marokane. “Three weeks ago . . . the whole country had to rely on Eskom generation for three days,” he adds, due to prolonged cloudy weather slashing output from rooftop panels... In Australia, operators of the high-voltage transmission system have grappled with too little demand as consumers draw power from their rooftop panels rather than the grid. Very low demand can make it harder to run certain power plants needed to keep the whole system stable.

2. AI is transforming warfare, and the Russia-Ukraine war is the testing ground for these technologies. 

AI technology has changed how the war in Ukraine is fought. At the start of the conflict it could take 20 minutes to identify a target and launch a strike. Now that process can take less than two minutes, sometimes just seconds... When militaries talk about AI, they are not talking about a single system. They are referring to software being used at different stages of warfare — collecting and processing data, helping commanders identify and prioritise targets and allowing drones to keep operating when communications are jammed. AI-enabled software can process “mass data at a scale, a speed that human staff officers can’t do”, says Anthony King, professor of war studies and director of the University of Exeter’s Strategy and Security Institute. Rather than altering the sharp end of a conflict, King says the primary function of AI has been to improve “situational awareness and intelligence”. The technology can help commanders make battlefield predictions, from the sustainability of a campaign to the rate at which munitions are being depleted.

3. What are the fiscal costs of immigrants?

The UK's comparatively low rates of tax and social insurance contributions for low-paid workers plus a relatively flat state pension mean that people (immigrant or otherwise) who do small amounts of paid work or remain on low incomes contribute little to the exchequer but still benefit from robust state support. In Germany or France’s fiscal systems, someone with the same weak employment and earnings patterns would generate much larger receipts from tax and social insurance due to the flatter tax regime, and would receive a comparatively smaller pension since these are linked more tightly to lifetime earnings.

The result is that in order to be a net fiscal contributor over their lifetime, the average couple arriving in the UK at age 30 needs the primary earner to have a salary at the 55th percentile of the overall earnings distribution, compared to the 45th in France and 28th in Germany. This is according to a new working paper on the fiscal impacts of immigration in different European countries by Usama Polani, a researcher at the Stanford Institute for Economic and Policy Research. Put another way, for immigration to be financially beneficial to the state, the UK needs to attract migrants with much higher pay and rates of employment than its peers.

4. The government seeks to restructure the governance of the storied Indian Statistical Institute (ISI). 

The ISI Bill 2026 seeks to repeal the earlier ISI Act 1959, changing the institute’s status from a registered society to a body corporate. This would replace its 1,800-plus-member general body and 33-member board with an 11-member board, with seven members aligned with the government and four representing ISI... The new board will be leaner by a factor of three: the President of India will be the visitor and will appoint the chairperson as well as four experts of her choice, joined by two representatives from Mospi. The four remaining members will come from ISI... The academic council, which discusses general syllabi, the number of students to be admitted, and new courses, has so far comprised all ISI professors, representatives from all constituencies, and the director as chairperson. The new bill changes that. Under it, the academic council is reduced to a small body, mostly made up of government representatives. The dean of studies is not a part of this council in the proposed bill.

5. Oil prices over the last fifty years.

Oil production is also less concentrated in the Middle East. The US is now the world’s largest producer, ensuring it will not have a supply shortage, and Canada, Brazil, Guyana, Venezuela have all increased production during the Iran crisis. More importantly, a barrel of oil matters less to the global economy than it used to. Oil’s share of global energy demand has fallen below 30 per cent from a peak of 46 per cent half a century ago. At the same time, the amount of energy needed to produce a unit of GDP has fallen by more than a third since 1990. Ben May, head of global macroeconomic research at Oxford Economics, says the inflationary impact of the Iran war has been dulled because “we went into the crisis with favourable oil supply” at a time when overall economic demand was “steady rather than spectacular”. When the war began, by contrast with the 1970s energy shock, the world had strategic reserves, an oil glut and growing supplies of liquefied natural gas, and a sophisticated trading system in which thousands of tankers criss-crossed the globe.

6.  NYT has this investigation of how online gambling giant DraftKings is using algorithms to target gamblers who are likely to lose the most.

So in 2023, DraftKings took customer betting records and built a machine learning model, a form of artificial intelligence that seeks patterns in data, to answer the question: Who was more likely to respond to promotions by gambling — and losing — more?... DraftKings makes money when gamblers lose money. And the model sought to identify those it could get to lose the most. It scored each customer based on their habits: The higher the score, the more money a gambler was likely to lose for each promotion offered... DraftKings has continued to hone its methods, using data science, to target losing gamblers with promotions that encourage more betting, according to six former employees who worked on them. 

At the same time, four other former employees said, DraftKings has stalled or squashed efforts to use similar technology to predict who might develop a gambling problem based on their betting activity... documents show how the model... analyzed dozens of data points for each gambler, including how frequently they played, their daily account balances and how much they typically lost compared with how much they bet. It also incorporated another model that calculated how likely a user was to stop gambling. This betting data may also contain signs that a person is headed for trouble. Yet when employees developed a machine learning model that would have assigned users “risk scores,” the company sidelined it, according to two former employees who worked on that project...

Promotions, which take on forms like a free bet, a “profit boost” or a deposit bonus, play a vital role in DraftKings’s business: The company brought in around $8.7 billion in gross revenue from sports and casino gamblers last year, and gave out about $3 billion in promotions, according to research by Citizens Bank... they were effective because they take advantage of gamblers’ psychology. “I feel I’m getting free money,” he said, “but really it’s dragging me back in.” Several gamblers told The Times that promotions fueled their addictions....

In 2018, when the Supreme Court ruled that states could legalize online sports gambling, it ushered in a new era in which betting has moved beyond casinos and racetracks. Professional sports games are now saturated with celebrity advertisements, encouraging people to wager on their phones. DraftKings and its rival FanDuel dominate this new industry, which has expanded into online casino games and, more recently, prediction markets. DraftKings says it has 11 million customers, compared with five million in 2022.... Silicon Valley firms spent years analyzing every digital interaction to predict what will keep users clicking on advertisements. Now, as companies like DraftKings have made gambling accessible to millions on smartphones, they too have collected an extraordinary wealth of data.

7. The imposition of the 0.4 per cent MDR fee on UPI transactions of more than Rs 2000 has generated intense debate. Janak Raj has a very good article. 

8. Some facts about the SpaceX business model assumptions.

Analysts have the company delivering revenues of over $650 billion, with an operating profit of over $335 billion by 2031. The company itself is projecting revenues of $1 trillion by 2030 (that is 25 per cent of India’s current gross domestic product). The models have the company generating no free cash flow through 2031, with capex of over $1.76 trillion from 2026 to 2031. Total annual capital expenditure for listed Nifty500 companies in India is about $100 billion. Such is the scale and ambition of SpaceX.

9. The cost differential between imported and domestically manufactured solar cells is significant, and assumes importance in light of the restrictions on the use of imported cells for grid-scale solar plants.  

The ALMM List-II mandate requiring domestically manufactured cells for utility-scale projects from 1 June 2026 tightened cell supply and lifted prices... The shift to domestic sourcing can sharply increase costs for projects that were originally bid on the assumption that imported cells would be used... Sudharman Ezhil, director and CEO of Natrinai Ventures (NGE Green Energy), said the cost difference between a domestic-cell plant and a non-DCR plant is currently at least ₹70 lakh to ₹1.2 crore per MW. "On a 50 MW project, that is ₹35–60 crore that was not in anyone's bid model," Ezhil said. According to him, projects bid before mid-2025 assumed imported cells at ₹14–15 per watt. The same module using a domestic cell now costs ₹24–25 per watt, he said. "That alone moves the total project cost by 15–20%," Ezhil said. He said the issue is not limited to cost. "Cell manufacturing is far more complex than module assembly, process control, wafer quality, yield, and India's listed cell capacity is a fraction of its module capacity," he said. Developers are therefore dealing with both higher procurement costs and uncertainty over the long-term performance of newly listed domestic cell lines. Projects awarded at tariffs of around ₹2.50–2.60 per unit were bid when costs were lower. Once a power purchase agreement is signed, developers have limited ability to pass on higher project costs through the agreed tariff... The domestic content requirement (DCR) premium alone could increase utility-scale tariffs by ₹0.25–0.40 per unit, even before the cost of storage is included.

Are we saying another round of defaults, restructurings, and consolidation in the solar industry? 

10. China ramps up gold imports in efforts to diversify its reserves.

China has spent a record sum importing more than 1,000 tonnes of gold this year as the central bank and local investors pour cash into bullion amid rising geopolitical tensions abroad and poor returns on local assets. The world’s second-largest economy spent $158.8bn on gold in the first eight months of the year. That compared with spending of $96.5bn for all of 2025 on 886 tonnes of gold... Chinese investors are increasing gold purchases as part of broader efforts to diversify their assets. Chinese holdings of US Treasuries fell to $618bn in July — the lowest level since August 2008...  

Domestic investment options in China are more limited since the country’s property market began collapsing in 2021. The benchmark CSI 300 index is down 1.8 per cent for the year and is still more than a fifth below its peak in early 2021. Meanwhile, yields on Chinese government bonds are close to record lows.

11. The yen carry trade, which has been an important driver of cross-border capital flows and a major buyer of US Treasuries, apart from contributing to keeping down the value of the yen, may be reversing after nearly three decades. 

The yen carry trade is the term for when hedge funds and others use Japan’s currency to access low-cost financing to make bets in markets across the world. For almost 30 years, investors have borrowed the cheap, stable yen in order to fund higher-yielding investments elsewhere, exploiting differences in interest rates and, in particular, the fact that until this month the central bank benchmark rate had not risen above 1 per cent since 1995. But every so often, those differences threaten to shrink, or the value of the yen shifts with unexpected speed. Investors exit carry trades and dump the acquired assets — fuelling spectacular spasms in global markets from emerging economy debt and Nasdaq stocks to cryptocurrencies and luxury property. For this reason, the health of the global economy is deeply connected to the state of the yen, making the carry trade a proxy — albeit an opaque one — for risk...

Even though its true size is extremely hard to gauge, the current value of the carry trade may far exceed $2tn, making it probably the biggest it has ever been, the world’s regulators heard from the experts in Tokyo. The concern that the cheap yen may be anchoring US Treasuries and may have helped inflate a bubble in AI-related shares, they added, leads the list of worries. Many strategists now say that one of the top risks for the year is the danger that the carry trade unwinds... In previous reckonings of the carry trade, the overseas investments of Japanese companies were rarely considered... According to data from Citi, the total outstanding Japanese stock of foreign direct investment, incorporating equity capital, reinvested earnings and debt capital, reached ¥384tn in 2025, meaning it has increased from 20 per cent of GDP in 2014 to more than half today. Citi estimates that non-financial corporations in Japan now hold more overseas assets than banks, pension funds and insurance companies...

For years, the speculative carry trade and the enormous underlying outflow of corporate Japan’s investment created downward pressure on the yen. Now, analysts are wrestling with the prospect of that being reversed - even if many believe that Japanese households and companies are too conservative to move with speed. The mere fear of such an outcome could start a carry trade unwind in motion as investors rethink how safe their current positions really are... A sharp carry-trade reversal, or a massive but gradual repatriation of Japanese capital taking advantage of decades-high yields on domestic bonds, could prove extremely painful to Bessent and other finance ministers across the world. During its era of rock-bottom yields at home, Japan has been a reliable source of demand to absorb record levels of rich-world sovereign borrowing.

12. Anthropic's spectacular pre-IPO valuation run up.

Founded in 2021, the creator of Claude hadn’t even produced a dollar in revenue until 2023. By August, it was making around $65bn on an annualised basis, although such unofficial numbers should be treated with kid gloves. This growth seems to have come as a surprise to Amodei too. Only 18 months ago, Anthropic expected its revenue in 2027 to be just $12bn. Now, some investors predict a revenue run-rate of $320bn by the end of next year. They are not impartial, of course. But if they are right, then $2tn would represent a valuation of just seven times its 2028 sales. That’s a little less than Microsoft, according to LSEG. SpaceX, meanwhile, trades at 16 times that year’s revenue. Take that as the benchmark — they are both companies with wild aspirations and charismatic leaders — and Anthropic could in future be worth $5tn.

13. Big Tech guarantees are surging and risks spinning out of control. Morgan Stanley analysts estimate $3.1 trillion in guarantees issued by the seven hyperscalers and chipmakers.

Big Tech companies are rapidly expanding their use of guarantees to back debt for AI data centres and chips, issuing up to $300bn in commitments in less than a year while recording little of that exposure on their balance sheets... These arrangements, under which tech companies guarantee a minimum future value for chips or data centres, join a growing set of creative financing structures embraced by Big Tech to accelerate the AI infrastructure boom... They typically backstop debt that is issued not by the tech companies themselves but by special-purpose vehicles that own the infrastructure, allowing the tech groups to lend their financial strength to the deals without needing to fully book the liabilities. The rise of guarantees adds a layer of exposure if Big Tech’s multitrillion-dollar bet on AI does not pay off because of disappointing usage, an oversupply of computing power or the failure to build sustainable business models around the technology... Their introduction to AI financing has unlocked cheaper financing for projects with these guarantees, which typically price at just a 100 to 150 basis-point premium to the guarantor’s own debt... Because the guarantor only covers the gap between the sale price and the guaranteed value, residual value guarantees “get more efficient balance-sheet treatment than a typical payment guarantee.”

Weekend reading links

1. A fascinating article by Ed Conway documents how a cod fish caught off the Scottish coast travels 30,000 nautical miles to Rotterdam, Shandong, China (for manual deboning and skinning), and back to the UK, where it is breaded and sold as fish fingers.

2. AI solves the Navier Stokes equation breakdown.

Scientists plug in numbers to the NS equations to derive accurate answers for the behaviour of moving fluids. But the NS equations can sometimes return apparent nonsense, predicting things like infinite velocity and zero volume (called a “singularity”)... Can it be proved that the NS mathematics don’t allow infinite velocity? Or alternatively, can it be proved that this can happen in some theoretical cases, weird as that may seem? Mathematicians refer to this possibility as a “breakdown” in the “existence and smoothness” of NS. .. NS is one of the seven famous Millennium Problems that were listed in 2000. The Clay Institute offers a prize of $1million for a proof that, one way or another, addresses four specific conditions for NS. 

On Tuesday, September 8, OpenAI announced that it had found a solution to the NS problem by using a new AI model after 88 hours of intense computation involving 10,000 AI agents and 17 hours of verification. The agents exchanged 3 million messages and used 130 billion output tokens, which amounts to costs of well over $10 million. OpenAI claims its AI resolved two out of the four statements in the proof demanded by the Millennium Prize and that, indeed, infinite velocity is theoretically possible under certain conditions.

3. Brilliant description of the Dauphin discount, applied when a founder-owner hands over the reins to his entitled but not similarly competent children. 

4. There may have been an inflation regime shift in the US in the last few years. Consumer prices overall have risen more than 30 percent since the beginning of 2019. That’s two and a half times as much as they went up from 2012 to 2019.

Prices have risen sharply across the board.

5. US inflation clearly owes to the Iran misadventure. 

6. Benn Steil has one more reason for the rising US bond yields. 

The interest rate demanded by investors to absorb this debt appears not to be a straight linear function of its growth. Instead, more debt seems to accelerate the rise in the rate demanded. The reason lies in who buys the debt. Nineteen years ago, 76 per cent of US Treasury bonds were held by price-insensitive investors, such as central banks, who bought them more or less reflexively according to their stable reserve-management policies. Today, they hold only 43 per cent. The majority is now held by price-sensitive investors, such as households and investment funds, which demand greater returns as government debt grows and inflation erodes their purchasing power...

The twin problems of surging Treasury supply and stagnant foreign official demand will be exacerbated further still if new Federal Reserve chair Kevin Warsh ploughs forward with his stated ambition of reducing the central bank’s security holdings. The last episode of Fed balance-sheet reduction saw the share of Treasuries held by price-sensitive investors soar by 17 percentage points over 2022 to 2025, while the so-called term premium — the extra compensation demanded by investors to hold long-term debt — rose by 1.1 percentage points. Given the continued increase in price-sensitive investor dominance, further Fed balance-sheet reduction could see yet sharper rises in the price of long-term US debt.

7. VC wealth multiplication.

Founders Fund, for example, turned a roughly $600mn investment in Musk’s rocket, satellite and AI group into a stake worth more than $50bn at the company’s initial public offering, according to PitchBook estimates.

8. More on the collateral benefits of Aliko Dangote's business activities (HT: Adam Tooze).

Africa’s richest man, Aliko Dangote, wants his drivers, cooks and security guards to own a share of the continent’s largest refinery. At a signing ceremony in Lagos, Nigeria, on Monday, 7 September, Dangote Petroleum Refinery and Petrochemicals (DPRP) free establishment zone launched the formal process for what is expected to be Africa’s largest public share sale, aiming to raise ₦2.15trn ($1.4bn). The offer comprises 4.1 billion ordinary shares at ₦525 per share, with a minimum subscription of 10 shares. It opens on 14 September and closes on 13 October. “There is no segregation of who can own the share. We want every human being living on the continent to be part of this action,” says Dangote, president and chief executive of Dangote Industries Limited. “This is why we have called it the IPO for the people.” 

He said the offer, which opens on 14 September and closes on 13 October, is designed to allow “drivers, cooks, servers, our managers, everybody” to own a stake in the refinery. The IPO is targeting about 10 million retail investors, according to FirstCap Limited, one of the parties to the transaction. “This transaction is not just about the size of the offer; it’s about the significance and how it’s going to shape retail investment in Nigeria’s capital markets,” said Ukandu Ukandu, MD/CEO of FirstCap, describing the deal as digitally driven and built for mass participation. “Family members, security guards, drivers, colleagues, schoolmates, community members are all encouraged to participate.” Dangote described the raise as less of a financing exercise than a wealth-distribution one, calling the ₦2trn target “too small” and “a meagre amount” relative to the group’s needs. He said the proceeds are earmarked for the refinery’s expansion.

9. Tiruppur facts of the week.

Its knitwear exports rose from $3.3 billion in 2020-21 to $5.3 billion in 2024-25 (TEA, 2026). The cluster accounts for about 68 per cent of India’s knitwear exports and supports the livelihoods of more than a million workers, around 70 per cent of them being women. Within roughly 20 km, yarn, knitting, dyeing, printing, stitching, finishing, packaging and dispatch are woven into one production ecosystem. Nearly 20,000 units operate across different stages, from knitting, dyeing and printing to garmenting and ancillary activities. This is the ecosystem effect where firms specialise, workers specialise, and thousands of jobs are created around a common market.

10. India's affordable housing market facts.

The preference for midsize housing priced between ₹45 lakh and ₹90 lakh fell to 21 per cent in H1 2026, from as high as 35 per cent in H1 2021. Similarly, preference for housing priced below ₹45 lakh declined from 27 per cent in H1 2021 to 18 per cent in H1 2026. “This is also mirrored in supply, with affordable housing’s share of new launches across the top seven cities declining from 26 per cent in H1 2021 to just 8 per cent in H1 2026,” says Anuj Puri, chairman of Anarock.

11. KP Krishnan makes very important points while questioning the RBI's recent FCNR (B) scheme which attracted $136 billion.

The capital flow of $136 billion is brought in by providing currency hedging to commercial banks at no cost. A forward guarantee on the exchange rate creates a contingent liability for the state. If macroeconomic fundamentals guide the exchange rate to ₹110 per dollar in three years, the RBI will pay ₹15 per dollar. This is a cost of approximately ₹2 trillion... Such tricks have been done before. India Development Bonds 1991 raised an estimated 0.6 per cent of gross domestic product. Resurgent India Bonds of 1998 raised 1 per cent, and India Millennium Deposits 2000 raised 1.2 per cent of GDP. The 2013 FCNR(B) exercise raised 1.4 per cent of GDP. The 2026 FCNR(B) raised 3.5 per cent of GDP. The scale, the opacity, the complexity have gone up. ... The daily inflow and outflow across India’s borders is $11 billion. The global daily trading volume on the rupee is $140 billion. Throwing just $2 billion a day at the problem for 250 days will burn through $500 billion.

We should instead take one step back and ask the foundational question: All this drama is in return for what? Recent research by Hande et al. (2026, https://bit.ly/4dlXP5d) indicates that the natural annualised volatility of the USD/INR exchange rate, without intervention, is approximately 7.5 per cent a year. The apparatus of intervention generates a realised volatility of roughly 5 per cent a year. We suffer fiscal risk, distorted monetary policy, instability, and constraints on financial development, which impact the people through inferior economic growth. In return, we get a 2.5 percentage point reduction in currency volatility, which benefits a small set of business users.

12. This is a staggering statistic on IPOs 

Anthropic’s investors are expecting the company to reach a valuation of $2tn when it goes public in the coming weeks. Add in SpaceX, which began trading at $2tn after its IPO in June, and OpenAI, which is considering raising money privately at $1.2tn ahead of a public listing next year, and these companies alone could be worth well north of $5tn. Now compare that with the entire history of IPOs from 1980 to 2025. The 3,365 tech companies that went public in that period were worth a combined $4.1tn when they started trading, according to data compiled by Jay Ritter, emeritus professor at the University of Florida’s Warrington College of Business.

13. The return of conglomerates, but with overlapping national strategic goals.

In China, Huawei has gone from an empire with two business lines to a local champion with 70 per cent of sales at home in five divisions. Chinese car companies own their supply chains — BYD operates ships. To defuse sovereignty fears abroad, they are willing to forfeit control, using licensing and joint ventures. India’s Reliance and Tata have re-embraced nation building across industries, from cola to air defence. Even in America, Amazon and Alphabet have become conglomerates that own parts of their supply chains, such as chip design. SpaceX’s strategy is to be a techno-national champion with up to nine divisions, from asteroid mining to tourism. In the pursuit of state-endorsed AI, OpenAI has gone further than Amodei, offering Uncle Sam an equity stake. US pharmaceutical companies want new drugs invented in China, but geopolitics makes takeovers impossible. Instead, there is a surge in licensing. Bristol Myers Squibb and Pfizer have made bets worth up to $26bn. In Europe, some firms are diversifying to plug strategic holes. The parent of Lidl, a supermarket, does data centres. Renault is expanding into military drones. Governments are trying to dilute US tech companies’ control over their local subsidiaries.

14. Gig work platforms are a form of unemployment insurance, and are now running the risk of being disrupted by the likes of autonomous vehicles and robo-delivery agents. 

Gig platforms have indeed become a safety net for people who have fallen out of — or struggled to access — the formal labour market. A report by the World Bank in 2023 estimated there were between 154mn and 435mn online gig workers globally, representing between 4.4 and 12.5 per cent of the global labour force. Among the advantages of this development, according to the report’s authors, are that it “helps manage income shock” and “serves as unemployment insurance”.

China is perhaps the best example of a country in which gig work has served as a labour market shock absorber. Amid a prolonged construction downturn and the increasing automation of manufacturing work, the number of people who work as food delivery or ridesharing drivers in China increased by 10mn in two years to reach 53mn in 2025, according to estimates by the China New Employment Forms Research Center, a Beijing think-tank. 

15. A very good oped by Boddu Srujana raises the important point about what UPI has done for its users, especially those in the informal sector whose services are now captured in the formal net. She writes,

This system has made India’s informal workers extraordinarily visible to banks, lenders, the state and to the platforms that manage their labour, without making them correspondingly secure... A worker who has been absorbed into a real-time national payments system is traceable and taxable, still has no pension, no enforceable minimum earning, and no institutional means of bargaining... The JAM trinity — Jan Dhan, Aadhaar, mobile — was to deliver subsidies with less leakage. UPI extended that logic to everyday commerce by enabling a vegetable vendor not to worry about carrying cash, with payments settled in seconds rather than requiring a trip to a bank that takes hours. But this is not the same as securing income and financial inclusion. As operationalised in India, it has functioned as a substitute for the much harder political project of labour formalisation... 

A worker’s UPI trail has become the raw material for an entire private lending and “alternative credit scoring” industry, sitting atop a public rail, useful to someone who lacked collateral, but built with little meaningful consent. The same logic now governs platform work. UPI-enabled instant settlement is what allowed gig and delivery platforms to scale... it has done so by making these workers legally almost unclassifiable — employee or contractor — and by subjecting them to algorithmic discipline such as ratings and incentive structures, without any corresponding algorithmic right to contest a rating or know why an account was switched off.

16. Finally, some FDI facts about Indian states.

Nearly 82 per cent of all FDI equity inflows into India went to just six states or Union territories — Maharashtra, Delhi, Karnataka, Gujarat, Tamil Nadu, and Andhra Pradesh (including Telangana) — from January 2000 to March 2026... Among sectors, services had the highest share at 16.37 per cent in gross FDI equity inflows from January 2000 to December 2025, followed by computer software and hardware (15.62 per cent) and trading (6.55 per cent). Financial services accounted for the largest share within the services sector.

And several questions about the value of EoDB and Business Reform Action Plan (BRAP) rankings in determining FDI flows. 

States such as Maharashtra, Delhi, Karnataka and Tamil Nadu fared poorly in the Ease of Doing Business (EoDB) rankings released by the government in different years over the past decade. For instance, Delhi and Tamil Nadu featured outside the top 10 in 2015, 2016, 2017 and 2019, while Maharashtra and Karnataka’s best performance in these four years was the eighth rank... On the other hand, states like Madhya Pradesh, Chhattisgarh, Jharkhand, Rajasthan and Telangana had relatively better rankings but considerably lower FDI inflows to boot... None of the top FDI receiving states was in the top two categories in the latest ranking of 2024. Experts say EoDB and BRAP rankings are not the prime reason behind FDI inflows. Instead inflows reflect states’ infrastructure, access to ports, prosperity and presence of industrial networks.

Weekend reading links

1. The rise of zero-sum politics in the West.

In the US, UK, France and Germany zero-sum beliefs on the left (eg people only get rich by making others poor) and the right (eg immigrants succeed at the expense of the native-born) are related expressions of the same underlying worldview. Namely that there is only so much to go around and we must therefore use restrictions, exactions and preferential treatment to redress the balance between winners and losers.

2. Primer on how the Labour Codes will contribute to the formalisation of the economy. 

3. Tim Wu contrasts America's all-in bet on proprietary AI-led innovation with China's diversified bet on renewables and green technologies coupled with applications of AI through open-source models. The article has this graphic which shows how Chinese exports to developing countries has taken off exponentially.

Last year, 70 per cent of the world’s EVs were manufactured in China. China also accounts for roughly 80-85 per cent of global solar photovoltaic manufacturing, and more than 75 per cent of all global battery production.

4. Data centre construction in the US is now on par with office construction!

And this on their power demand.

Across America, data centres represent a combined capacity of about 51GW. Running at their maximum, this equates to 5 per cent of the country’s peak demand. By 2028, an estimated 44GW of additional capacity will be required by new data centres, according to S&P Global Energy. Given constraints to grid infrastructure, power capacity coming online in the next three years will only be able to provide about 25GW for these data centres. That leaves a gap of 19GW — just over 40 per cent of the power needed... After more than two decades of flat or anaemic growth, US power demand is now surging. Electricity usage is projected to rise by an average of 5.7 per cent a year to 2030, based on forecasts from utility companies... more than half of the expected increase stems from the rapid build-out of AI data centres, according to consultancy Grid Strategies.

And the constraints to power capacity expansion.

Boosting the US power grid is an enormous and time-consuming task due to a complex web of regulatory, financial and supply chain challenges. Interconnection queues — backlogs of projects waiting to plug into the network — have become a major chokepoint, slowing the rollout of new power capacity and leaving data centres facing lengthy delays... The average time from filing an interconnection request to achieving commercial operation now exceeds eight years, according to energy think-tank RMI... On average, federal permitting for a new US transmission line takes about four years, according to the Department of Energy. State processes add further delays to grid build-out. Last year, almost 900 miles of new high-voltage transmission lines were completed, according to lobby group Americans for a Clean Energy Grid. This is the most since 2020, but still far short of the 5,000 miles a year the group estimates is needed to support grid reliability and growth.

5. Like in China, India's solar manufacturing capacity is entering a glut and is also due for consolidation. 

Edinburgh-based energy consultant Wood Mackenzie estimates the country’s solar module manufacturing capacity will exceed 125GW by 2025, which is more than three times its domestic demand of around 40GW. Nomura projects capacity additions of 100-110GW in the next three years, further raising the risk of oversupply and painful consolidation.

This is an interesting comparison with China, pointing to future pain.

In China, half of the six major solar IPOs of the past two decades now trade below their issue price. In the US, SunPower has filed for bankruptcy. Even today, China’s JA Solar, with nearly 85GW each of ingot-wafer and cell capacity, is valued on par with India’s Waaree Energies, which has only a fraction of that scale... Some distress from oversupply is already visible in the supply chain. While the large, cash-rich players, including Adani, Waaree and Premier Energies, are tightening their hold on the sector by backward-integrating their supply chain and protecting their future margins, the smaller players are struggling to keep their plants running.

Worsening matters further is the lack of demand for solar power among discoms. 

India’s solar energy capacity currently totals 130GW, according to the ministry of new and renewable energy... As of September, around 44GW of tendered clean energy capacity, out of 93GW since fiscal year 2024 (FY24), remains without buyers... The ministry said in early November that it may look to cancel these projects on a case-by-case basis. One of the primary reasons for unsigned agreements is that state utilities expect solar prices to fall further. 

This capacity explosion has been facilitated by industrial policy.

In 2022, India imposed 40% tariffs on solar modules and 25% tariffs on solar cells to discourage imports from China. Last year, the country dictated that Indian solar power producers must purchase from an approved list of domestic solar-module makers—there are 93 companies in the approved list so far. Similar rules for solar cells will come into effect next year. Further restrictions on imports of ingots and wafers that are building blocks of modules and cells are expected in the coming years.

But industrial policy does not appear to be able to bridge competitiveness. 

Under new domestic content requirements, an entirely ‘Made in India’ module would cost more than double Chinese-manufactured modules, making it uncompetitive without substantial government policy support.

While India's solar manufacturing capacity is now largely at the level of modules, the government is pushing hard to integrate backwards into cells, ingots, wafers, and polycrystalline. But that's challenging. 

Owing to the complexities involved, the cell is the most capex-intensive segment. According to Nomura, capital expenditure per GW of cells can total ₹6,500 crore versus ₹2,000 crore for modules. Ingots and wafers need up to ₹4,500 to build 1GW capacity. As the supply glut in modules deepens, large integrated players such as Reliance Industries, Adani Enterprises, Waaree, Premier and Tata Power, which are investing across the value chain, are better positioned to survive... All large and listed players have announced plans to backward integrate, expecting that impending import restrictions further down the value chain will keep profits coming. According to Nomura, 70-80GW of cell capacity additions will come online over the next three years. It is 18.5GW right now.

Solar energy has the lowest tariff rate.

6. As developed countries grapple with high and rising debt burdens, some pointers.

While the ratio of debt to GDP in the world’s biggest economy shrank from 106 per cent in 1946 to 21.6 per cent in 1990-91, it has since lurched back up to almost 100 per cent thanks to, among other things, the financial crisis and Covid-19... The postwar experience of the UK provides a case study of how these factors interact. The country’s debt-to-GDP ratio went from more than 250 per cent in 1946 to just 42 per cent three decades later. In a seminal piece of research, Barry Eichengreen and Rui Esteves show that for most of the 1946 to 1955 debt consolidation episode, the UK ran consistent, large primary budget surpluses despite the Labour government’s huge expansion of the welfare state. Yet the largest contribution to debt reduction came from inflation, which was responsible for more than 80 per cent of the debt consolidation over the period. That said, from 1955, fiscal discipline and economic growth did most of the work — surprisingly given Britain’s record at the time for economic incompetence — because the contribution of consumer price inflation, which peaked at 24 per cent in 1975, was neutralised by rocketing interest rates.

7. K-shaped income gain + K-shaped wealth gain = K-shaped economy. Rana Faroohar writes about the K-shaped economy in the US.  

Consider income growth, which was higher for low-income households right before and during the pandemic — in large part because of support from the Biden administration — but has diverged since. Wage growth for low-income workers is now lower than for middle- and high-income workers. This is partly explained by the artificial intelligence boom that is showing up in higher unemployment figures for young college graduates as more entry-level white-collar work is done by technology. Asset growth is K-shaped too, with higher-income households seeing lots of paper wealth from stocks at still near-record highs and rising home prices. According to investment group Apollo, the cash flow received in fixed income, including private credit, is nearing levels not seen in decades. That wealth effect has propelled the existing K-shaped trend in consumer spending. The percentage of overall spending done by the top 10 per cent of the socio-economic spectrum has risen from 36 per cent to nearly half since 1989, according to Moody’s analytics.

8. Daron Acemoglu points to the breakdown of the liberal democratic politics.

Liberal democracy was made by its pledges. It plunged into crisis because of their undoing. A lot of this volte-face was about the eclipse of the industrial compact and the rise of a post-industrial society, dominated by digital technologies and the college-educated professionals that these empowered. Digital technologies severed the link between economic growth and shared prosperity. With the widespread automation enabled by digital tools, companies could expand without hiring more employees and paying workers more, and the skill bias of these technologies gave a boost to the earnings of highly educated and managerial workers. The result was a staggering increase in inequality in the US, with the inflation-adjusted wages of low-education men falling most years between 1980 and 2014 — even as the aggregate economy and the urban, globalised professionals were flourishing.

That the computer age was leaving behind the working class, which used to typically support left-leaning parties, was unnoticed by the college-educated, who were becoming politically and socially ascendant in the environment digital technologies created. That they had started living separately, socialising separately, marrying separately, and holding very different views from the less educated undergirded this omission. There was also a major sin of commission on the part of left liberals. As they abandoned classic working-class or social democratic issues, they started focusing on cultural politics — in part because cultural divides had become more pronounced and in some ways more intractable in an age defined by shifting mores, globalisation and increasing immigration flows from countries with dissimilar traditions.

But the cultural divide that emerged between different education groups and ideologies did not have a simple solution. Even as norms were changing on important issues such as gay marriage, new rifts were opening related to the assimilation of new immigrants, transgender rights and cosmopolitan versus local priorities. The college-educated, fatefully, turned to social engineering efforts, trying to accelerate cultural change — in universities, schools, the entertainment industry and even workplaces. These efforts, though often well meaning, were nonetheless perceived by many working-class communities as the imposition of the priorities of college-educated values on the rest of society. The scene was set for a crisis of liberalism and of liberal democracy.

9. Importance of Samarium, a rare earth mineral, and how the US gave up its leadership.

Most rare-earth magnets are made of neodymium, which is used in everyday applications such as cellphones, auto parts and electronics. But the defense industry requires samarium-cobalt magnets, which can withstand extreme heat... Unless new sources of samarium or a substitute material can be found, American manufacturers won’t be able to build fighter jets or precision-guided missiles. They may be forced to sacrifice precision if they can’t get the right magnets... 

Although samarium-cobalt magnets were invented in an Air Force research lab in Ohio in the 1960s, the industry moved to China in the 1980s, partly because of rich rare-earth deposits there. Today, China mines, processes, sells and consumes such large volumes of rare-earth metals that it can drop the price below the cost of production when foreign competitors come online. American and European companies have struggled to stay afloat. Many either declared bankruptcy or opened factories in China.

And the difficulty of reshoring, even with good policy intent, without a crisis hitting.

In recent years, American policymakers have tried to build a domestic supply. The National Defense Authorization Act of 2023 and 2024 gradually tightened restrictions on the use of rare-earth metals from China in weapons systems, and stipulated that all such materials must be China-free by Jan. 1, 2027. But such mandates have been inconsistently enforced, partly because alternatives are not available. In 2023 and 2024, when magnets were supposed to be made of metal that was created outside China, Lockheed Martin notified the Pentagon that its F-35 Joint Strike Fighter had Chinese-made magnets. The military paused production of the jet for months but eventually issued a waiver allowing the parts.

10. The Bank of Japan raises its benchmark interest rates to a 30 year high.

Alongside, yields on 10 year government bonds have touched 2% for the first time since 1999. 

11. Assessment of the Insolvency and Bankruptcy Code implementation.

The data from the Insolvency and Bankruptcy Board of India (IBBI) shows that by September, 8,659 corporate insolvency resolution processes (CIRPs) had been admitted. Of those 1,898 cases were ongoing. More tellingly, about 1,300 CIRPs that resulted in resolution plans took an average of 603 days, while 2,896 cases that ended in liquidation took 518 days, far exceeding the statutory outer limit of 330 days prescribed under the IBC... Despite procedural delays, the IBC has had a meaningful impact on India’s banking system and credit culture. Resolved cases have delivered 32.44 per cent recovery of admitted claims, translating into more than 170 per cent of liquidation value, and have helped rescue about 1,300 firms. Equally important, the threat of losing control has altered borrower behaviour, improving repayment discipline and encouraging early settlement.

12. US corporate profits are at all time highs.

13. America's K-shaped economy.

14. Financial engineering is never far away in boom times. FT reports how Big Tech firms are shifting debts assumed to finance AI spending out of their balance sheets through project financed SPVs. 

Financial institutions including Pimco, BlackRock, Apollo, Blue Owl Capital and US banks such as JPMorgan have supplied at least $120bn in debt and equity for these tech groups’ computing infrastructure, according to a Financial Times analysis. That money is channelled through special purpose holding companies known as SPVs. The rush of financings, which do not show up on the tech companies’ balance sheets, may be obscuring the risks that these groups are running — and who will be on the hook if AI demand disappoints... 

Tapping private capital funding through off-balance sheet structures protects companies’ credit ratings and flatters their financial metrics. Meta in October completed the largest private credit data centre deal, a $30bn agreement for its proposed Hyperion facility in Louisiana that created an SPV called Beignet Investor with New York financing firm Blue Owl Capital. The SPV raised $30bn, including about $27bn of loans from Pimco, BlackRock, Apollo and others, as well as $3bn in equity from Blue Owl. The deal meant Meta could in effect borrow $30bn without any of the debt appearing on its balance sheet. This made it easier to raise a further $30bn in the corporate bond market a few weeks later.

15. Demystifying Adam Smith's invisible hand

The popular understanding of the “invisible hand” is even further off the mark. Smith borrows the phrase from Macbeth, who talks about a “bloody and invisible hand” shortly before murdering Banquo. In all his works, the economist mentions the phrase just three times, in three different contexts—and never in reference to the price mechanism... In fact, he often favoured the visible hand of government. He urged the state to provide education. He favoured legal caps on interest rates. Today, almost all free-market economists despise America’s Jones Act, which requires that shipping between American ports be conducted on vessels that are built, owned and largely crewed domestically. Smith, by contrast, favoured the Navigation Acts, a similar British law. 

Smith acknowledged the benefits of markets, but also their costs. Consider his famous pin factory. The division of labour within it allowed workers to produce thousands more pins than if they were working alone. Countries that perfected the art of dividing labour, Smith argued, would grow rich. Yet he also worried that a life spent on a few simple operations would make a labourer “as stupid and ignorant as it is possible for a human...to become”. Did Smith think the costs outweighed the benefits? It is hard to be sure.

16. VC failure rates

Sequoia’s best-ever US fund had half its investments fail.

17. Cross-border payments company Aspora is disrupting US-India remittance transfers. 

Fintechs Wise and Remitly do that by partnering with a local bank, with which they park funds worth two to three days of remittance volume as a lien. This fund lies as a security, untouched. Now, when a person in the US sends money to somebody in India, the fintech pings its Indian banking partner, which uses its own funds to make a local transfer to the recipient’s account. This reduces the speed of transfer from days to minutes. The fintech then reimburses the banking partner for all the transfers via a bulk cross-border transfer.

... 30–40% of the $135 billion remittances to India are locked in as liens to banks. Aspora does about $300 million worth of remittances a month. So, to maintain two days’ worth of remittance volumes with its local banking partners, like Yes Bank, the startup needs to park away at least $20 million of capital... In 2024, Aspora chose to route nearly a third of its cross-border remittances through stablecoins. These digital currencies operate with little legal oversight and take away the need to have so much capital as a lien... In using stablecoins, all that a fintech like Aspora had to do was partner with a cryptoexchange in the originating and receiving countries. And in the process, it can simply swap the US dollar for a stablecoin like Tether. That gets swapped out for the rupee by another exchange in India. This swapping involves a fee of 20 basis points in all, said the crypto-exchange executive, as the exchanges also take care of compliance, conversion, and the payout. That’s much less than maintaining liquidity, which can add up to 1% of the total cost...

When a fintech uses stablecoins to process remittances, the recipients are in a fix. For one, Indians have to pay a 1% tax on the money they receive. Two, the instruction that comes along with the remittance would only show that the money came from an exchange, not the sender... In fact, in some cases, when users sent money to their own accounts in India, local banks, unable to see the sender, saw it as suspicious activity and blocked their accounts.

The big risk Aspora faces is regulatory. Though not banned in India, RBI does not recognise Stablecoins or cryptocurrencies generally. Only about 1% of the $135 bn annual remittances use Stablecoins for now. 

The article also has an interesting graphic about the changes in sources of remittances into India. Declining share of Gulf remittances (except Qatar) and increasing shares from the US, UK, Australia, and Singapore. 

 18. For all talk of China's AI surge, it has few listed companies in the sector.

And the US and Europe dominate the higher end of the supply-chain. 

19. The world economy's China problem in one graphic.

20. Huawei triples local sourcing ratio in smartphones from 19% in 2020 to 57% in 2024!

Huawei increased the proportion of Chinese-made components in the Mate 70 Pro to 57%. The estimated total component cost of the Pura 80 Pro is $380, with the Chinese-made component ratio steady at 57%... For the Pura 80 Pro's system-on-a-chip, which integrates multiple semiconductors, the company used the Kirin 9020 chipset designed by subsidiary HiSilicon... For DRAM, which handles short-term memory, Huawei switched from imported products to those made by ChangXin Memory Technologies. For long-term NAND flash memory, it switched to products made by Yangtze Memory Technologies. Huawei switched to products from BOE Technology Group for the organic light-emitting diode display, which is estimated to cost over $64 per unit.

21. China is not leaving even caviar!

But in recent years Chinese companies have also entered the sphere with state support, led by Kaluga Queen, a farm on Lake Qingdao. And they have dived in with such stunning efficiency and focus — echoing what has happened with, say, solar panels — that Kaluga is now the biggest caviar producer in the world. Indeed, China accounts for between half and two-thirds of global production... And Chinese officials now want their entrepreneurs to expand into other gourmet foods like smoked salmon, Wagyu beef and truffles. That is creating waves: at a recent meeting of the North Atlantic Seafood Forum, a Nordic luminary flourished a 7kg Chinese-farmed salmon on stage — and declared it to be tasty, and cheap because of Beijing’s subsidies. Meanwhile, the Japanese government has restricted exports of Wagyu genetics to China to protect its beef farmers, and some Italian and French caviar houses are complaining about the pricing threat from Chinese rivals. American caviar makers are reportedly lobbying the White House for protection, too.

22. Finally, in celebration of racial integration, the Springbok rugby team.

The one thing that unites South Africans of all colours is the Springboks rugby team... South African rugby has been so “transformed” — a word the African National Congress uses to mean overcoming the grim legacy of apartheid — that affirmative action is no longer necessary. A squad, picked purely on merit, is automatically multiracial. The Springboks’ most celebrated players include Siya Kolisi, the inspirational captain, who is Black and from an impoverished township in the Eastern Cape. Sacha Feinberg-Mngomezulu, the brilliant fly-half, has a Zulu mother and a father of Jewish heritage. The 50-plus member squad named this year by Johan “Rassie” Erasmus, the Afrikaner head coach who has led the team to successive World Cup victories, contains players from South Africa’s Black, white and so-called Coloured communities. The Springboks are a case study of what successful Black empowerment looks like. Where once players were selected from among 4.5mn white people, today they are drawn from the entirety of South Africa’s 65mn population.

Weekend reading links

1. The Ken has a story which writes that the UPI has now become an oligopoly involving two companies - Phone Pe and Google Pay, who together make up nearly 85% of the UPI transactions. The NPCI had announced a 30% cap for any one company in 2020, and the deadline has since been extended to end of 2024. 

2. Chinese local governments are raising tariffs and fees on various utility and other services. 

China is taking the rare step of sharply increasing fares for riders on four major bullet train lines, in its broadest move to address rising costs and heavy debts since construction of the system began nearly two decades ago. The higher prices for train tickets are part of a push to raise prices for public services. Earlier this year, water and natural gas bills started going up in some cities. Public services in China are heavily subsidized by local governments. But huge municipal debts mean that these governments have less money on hand to keep prices down... China has already pushed up electricity charges considerably since 2021 for many factories, although residential customers continue to pay low, subsidized electricity rates...

The bullet trains... infrastructure has been paid for with enormous borrowing, which has reached $870 billion just for China State Railway Group, the state-owned enterprise that runs the rail network... Many of its lines are owned by joint ventures with provincial and municipal governments that helped pay for construction and are becoming less able to subsidize transportation... China has opened 28,000 miles of bullet train routes since 2008. Routes connect every major city and hundreds of smaller cities and towns. To put its size in perspective: The system is long enough to span the continental United States more than 10 times from New York to Los Angeles. The first line opened right before the Beijing Summer Olympics. China’s bullet trains typically run at either 186 or 217 miles per hour, depending on the route. Because the tracks are straight, the trains run for long distances without slowing down... With the price increases, the peak fare of a second-class high-speed train ticket from Wuhan to Guangzhou, a nearly 600-mile trip that takes less than four hours, will soon be $78. A ticket in first class, which has two seats on either side of the aisle like economy class on American trains but more leg room, will cost $125, and a lie-flat business class seat will cost $273.

3. In pursuit efficient management of their times, couples are taking to using work-management tools like Slack and Notion. This is one more example of efficiency maximisation taken to its extremes.  

4. The optimal currency area benefits that the richer South India gets over the poorer North India.

The more industrialised, richer countries get a huge captive market in the EU in which they can sell their products.  Those that have adopted the euro as their currency also get a huge competitive advantage as their labour becomes cheaper (relative to labour productivity), while that of the relatively poor countries in the euro — such as Spain, Greece, and Portugal — more expensive. The Bertelsmann Stiftung Foundation showed that German growth was 0.5 per cent per year higher due to the euro — largely because its national currency the D-Mark would have been stronger, and, as a result, exports were lower. Similar benefits also accrue to Austria and the Netherlands, and even to Denmark, which is not in the EU but keeps its krone pegged to it.  So, while the richer parts of the EU subsidise the poorer parts through fiscal transfers, they also gain by having a captive market and an undervalued currency that improves their competitiveness across the world.

5. Fascinating account in NYT about the evolution of road usage in New York City.

New York City’s streets were laid out before anyone knew how they would ultimately be used — long before cars were even invented. The first city planners could not have anticipated Uber vehicles, let alone Amazon deliveries or commuters on electric scooters. In New York’s earliest days, the streets were a free-for-all. People walked or rode horses. There were no crosswalks or stoplights; if you had to cross the street, you simply walked across the street. Soon, horse-drawn vehicles used the streets alongside pedestrians, and people dashed between them. (Later, New Yorkers dodged streetcars in much the same way, giving the Brooklyn baseball team its name.) The arrival of bicycles neatly encapsulated the city’s ever-shifting debate over how the streets should be used — and by whom. By the 1890s, the streets were full of bikes. Men and women took to cycling through the city so quickly — and dangerously — that it was called “scorching.” About 100 years later, in 1987, speeding bike messengers were deemed so dangerous that bicycles were banned from Midtown — temporarily. Today, the city encourages residents and visitors to ride bikes. New York has bike lanes and a flourishing bike share program, plus an explosion of food delivery powered by e-bikes. The renewed popularity has also come at a grave cost: Last year 30 cyclists were killed on city streets, and 395 were severely injured...

“At the end of the Gilded Age, right before World War I, suddenly, there were motor vehicles everywhere,” said James Nevius, an author and New York historian. The development meant people could move around faster — but it also put more people in danger. In 1920, there were about 200,000 registered vehicles in New York City; by 1925 that number had more than doubled. A century later, that figure is two million. And yet New Yorkers are still using the same streets that were laid out generations ago. In Manhattan, the rigid street grid was designed in 1811. Avenues are 100 feet across. Cross streets are 60 feet wide, including the space for sidewalks on both sides. That’s 720 inches in which to fit not just cars but also pedestrians, baby strollers, trash, compost, scaffolding, bicycles, e-bikes, scooters, skateboards, package delivery trolleys, garbage trucks, delivery trucks, food carts, 5G towers, dining sheds, trees, CitiBike docks, buses, taxis, ambulances and on-street parking. It’s like a giant game of Tetris — except all the pieces just won’t fit. In fact, some of the pieces are growing larger: In the past decade, the average vehicle got 12 percent longer and 17 percent wider. (Cars’ blind spots have also gotten larger.) And the number of pieces just keeps expanding. New York City’s population reached 8.8 million in 2020, and the New York region is now home to nearly 19 million people. The city’s population has dropped some in the past few years, but city officials believe that recent population estimates have significantly underestimated the number of newly arrived migrants, which, by some counts, is over 180,000...

Over the past 10 to 15 years, sweeping pedestrian plaza initiatives — detouring cars and encouraging space for sitting and strolling — have gradually changed the landscape, from the Jackson Heights neighborhood in Queens to Times Square. The Open Streets program restored pedestrian-first streets, free of cars and safe enough for strolling, chatting and letting kids ride bikes... And there are plenty of other places to look for inspiration: In Bogotá, Stockholm, London and Paris, certain streets are being closed to cars. There is an effort in Europe to avoid the oversize pickup trucks and SUVs that make American roads so deadly. Paris has designated “school streets” where cars have been removed to make way for children. Cycling is flourishing in Europe; emissions are down.

6. The investment-side story of the Indian economy over the last few years is nicely captured in this table.

Surging government capex has been the driver of economic growth, even as private capex and consumption have declined. The former has been driven by railways and highways, whose expenditures have indeed risen sharply. But the rise in government capex is exaggerated by the government assuming the debts of NHAI and Railways. Finally, the space for the government capex increase has been facilitated by the post-covid surge in fiscal deficit. 

Underlining the weakness in private investments throughout recent years, the value of completed projects has mostly stayed the same in real terms from 2017-18. 

This is likely to remain so for a longer time given that project completion in future is dictated by the projects started in recent years and today, and they have yet to show signs of an uptick. From a recent BS oped, this about private consumption and corporate investment trends.

The most recent National Accounts Statistics (NAS) show a drop in the annual rate of growth of consumption from around 7 per cent between 2011-12 and 2018-19 to a little over 4 per cent in the past five years.(Table 1.1 NAS 2024). In fact, the second advance estimate for 2023-24 shows only a 3 per cent growth in private consumption. In a large country like India, a slowdown in private consumption growth will affect corporate investment. That is why the recent NAS shows a drop in the annual rate of growth of private corporate investment from a little over 10 per cent between 2011-12 and 2015-16 to under 5 per cent in the years since then until 2022-23. (Table 1.11 NAS2024).

The weakness in private investment is despite the much improved corporate balance sheets, with the share of excessively leveraged corporates being among the lowest in Asia. And bank credit growing at record rates. 

7. Dani Rodrik critiques those who rail against Chinese green energy subsidies, arguing that they have dramatically reduced the prices of green technologies and expanded its access manifold. He argues that the need of the hour is more industrial policy and subsidies by all countries to make green technologies more affordable and accessible. He describes the case for subsidising green industries like China has done as "impeccable". 

He does acknowledge the problems with China's subsidies.

Countries have other interests besides the climate, of course. They can harbor legitimate concerns about the consequences of other countries’ green-industrial policies for jobs and innovative capacity at home. If they judge that these costs outweigh the climate and consumer benefits, they should be free to impose countervailing tariffs on imports, as trade rules already allow. It would be better for the world overall if they didn’t react that way, but nobody can or should stop them.

The problem is with the last line. While the Chinese green power subsidies have achieved tremendous success in mainstreaming green technologies, it has come at the cost of destroying local green industries elsewhere and making all countries chronically dependent on China for green technologies. Given green technologies are a major share of today's and future manufacturing, the destruction of the domestic manufacturing bases across countries due to cheap Chinese exports is a prohibitive and unacceptable price to pay. It becomes a serious, almost existential, national security risk when there's a Cold War raging and the near-certain weaponisation of its dominance in these frontier technologies by the Chinese government. 

The manufacturing trends in green technologies are an encore of what has happened across the manufacturing sectors in the last two decades. Thanks to the cheap Chinese imports, the manufacturing base that's essential to create the good jobs that Dani Rodrik frequently writes about has been seriously weakened across developed and developing countries. Besides, the world has become excessively dependent on China for even basic manufacturing, as the Covid 19 painfully exposed. 

Economists should consider this trend in manufacturing as a failure of comparative advantage. If there's a strong Matthew Effect, whereby the dominant producer is able to strengthen their position with economies of scale and subsidies, then comparative advantage and trade end up leaving the world economy worse off.

8. Among advanced economies, the Germans work the least and the Americans the most.

According to the OECD, the average annual hours worked by Germans are down 30 per cent in the past 50 years, falling a quarter below US levels, reflecting Europeans’ growing preferences for longer periods of leave and more leisure time.

9. Alan Beattie points to a problem with the definition of subsidies. The IMF has been pointing to "implicit subsidies" or countries failing to internalise the external costs including air pollution and road traffic accidents. 

By this measure, annual global fossil-fuel subsidies are a massive $7tn, nearly three times as much as worldwide spending on defence. This has caused considerable consternation in policy circles: old subsidy hands correctly point out that these estimates of implicit subsidies are highly uncertain and hence cannot practicably form the basis of international rules. They also often lead to a misleading idea — unfortunately propagated by the fund itself, its sister organisation the World Bank and the UN — that trillions of dollars are being spent on fossil-fuel subsidies and could be redirected elsewhere. In reality, the public money that supposedly funds implicit subsidies does not yet exist: it’s notional revenue from a tax the IMF thinks ought to be levied but isn’t.

Such subsidies are clearly defined by value systems and preferences of certain groups of countries. It raises several questions. What should be an acceptable level of internalisation? Why should only certain kinds of social costs be considered (labour standards, pollution etc.), whereas certain others are not considered (labour displacing technologies, cross-border capital flows)?

10. Rahul Jacob in Livemint has some stats about India's trade figures

A Federation of Indian Export Organisations report says that apparel, knitted garments, marine products, plastics, and gems and jewellery had grown at just 1 % to 2%. In fact, during 2023-24, while goods exports contracted by 3%, exports of textiles, leather, gems and jewellery and marine products declined 9%... A report earlier this year by Global Trade Research Initiative, a think-tank, contains alarming data-points on India’s decline in the global garments market. It states, “In 2023, China exported $114 billion worth of garments, followed by the EU with $94.4 billion, Vietnam with $81.6 billion, Bangladesh with $43.8 billion, and India with just $14.5 billion… From 2013 to 2023, Bangladesh’s garment exports grew (cumulatively) by 69.6%, Vietnam’s by 81.6%, but India’s grew by only 4.6%."

11. Finally, via Kyle Chan, some interesting graphics on the iPhone in the Nikkei Asian Review. The prices of iPhone components have been rising.

Apple has been largely absorbing a significant part of the price increases.

The share of China in the components cost is tiny. 

But the low share does not reveal that the components are manufactured in China - 87% of Apple's 187 suppliers have production facilities in China and China/HK headquartered companies make up more than half of Apple's suppliers.