The AI boom is also largely being funded by defense spending on both sides of the Pacific. Without state investment this technological boom would also suffer.
Solar went through a similar cycle with German and US funding for foundational R&D in the 1970s, which was eventually picked up by China's industry when it was mature enough.
SpaceX too.
There's a yin and yang to public and private that populists on all sides are ideologically incapable of appreciating.
This is not to say that just setting random tariffs to punish other countries is an effective strategy, but I do think that targeted limitation of imports are necessary in a society that is becoming extremely materialistic. My bet is that France's surcharge on Shein products will be the first of many
Notice how the term “housing bubble” is used much less frequently today than 10 years ago? That’s because that so-called bubble has been ballooning in size for three decades now, and almost nobody still believes that it will “burst” in any meaningful sense. The Dotcom bubble was in many ways an outlier.
People dont talk about housing bubble as much, because it is history at this point. Not something that would go on now.
And no, housing being expensive is not the same thing as a bubble. We dont have bubble in housing now.
<Australia weeps>
That's because Boomers live far longer than prior generations thanks to medical advances. The housing bubble will collapse (at least outside of the megalopolises) once the Boomers finally start to die en masse due to their over-representation in demographics.
But before that, the pension systems will crash hard. For people in systems with redistributions (like most of Europe), there simply aren't enough working age people contributing payments for the pensioners, and for people in stonk-based systems (e.g. US 401k), they will run into the issue that someone has to buy the stocks that the pensioners sell off to fund their retirement, and ain't no one of my generation buying stocks, thanks to us having to spend insane amounts of rent.
Without the AI bubble artificially propping up the GDP, it is most likely the US economy is in a recession [1].
[1] https://www.cnbc.com/2025/10/14/ai-infrastructure-boom-masks...
https://tradingeconomics.com/china/housing-index
Unsuccessfully, I might add.
Housing is being propped up by the governments of the west because it was already so problematic if it fails that millions of people would be severely impacted.
Even the housing backed mortgage crisis of 2008 was as large a shock as the great depression, the reason we’re not all using money as toilet paper is due to government intervention. Rightly or wrongly. Some people believe that this intervention makes something worse bound to happen later- and based on the cost of housing I tend to believe them. It is not sustainable to keep housing at its current cost, and the financial model requires that they continue to increase in price. If house prices fall it is a disaster for millions.
Then there is the fact that housing is a fundamental human need whereas AI, as frequently demonstrated, isn‘t even a want by many people.
I am not saying that AI cannot demonstrate todays value 20 years into the future. But there is zero reason to believe the short to medium term payoffs on AI investment will be proportional to the investment we‘ve seen over the past few years
That’s no longer true for datacenter-class GPUs. The A100 came out six years ago, and it still sells for $15k+, with no meaningful drop in the foreseeable future.
"The official protocols define the scope of GDP as measuring all monetised activity between willing parties in a given period. It is a pragmatic definition, but leads to some counterintuitive results. The sale of stolen goods for cash contributes positively to GDP, for example — so theft is good for growth. A parent’s housework and childcare, however, being unpaid, are excluded — resulting, by one recent evaluation, in a $3.8 trillion underestimate of the size of the US economy."
I vaguely remember a similar one around traffic jams as well.
[1] https://www.ft.com/content/b6182440-f21e-11e7-bb7d-c3edfe974...
https://energyforgrowth.org/article/watch-countries-climb-th...
- Intergenerational social mobility trend
Not doing great on either.
1. Look at income and consumption rather than production
2. Consider income and consumption jointly with wealth
3. Emphasize the household perspective (with this they seem to be focusing on more meaningful measurement of in-kind services and inter-sector payments, like government provision of healthcare and education, etc.)
4. Give more prominence to the distribution of income, consumption, and wealth
5. Broaden income measures to non-market activites (their examples here are things like childcare, where a shift from non-market childcare to market childcare over time can create the illusion of an increase in productivity)
Personally #4 is my biggest beef with GDP (and related measures like GDP per capita). Without some kind of adjustment for inequality, GDP can easily make bad things look good. What we need is not overall growth but equitably distributed gains; even a decrease in GDP could result in most people being better off if it occurred because of wealth redistribution.
Which mechanisms exist to redistribute wealth fairly?
Instead of looking at the US, let's look at what used to be a relevant ally...
In the eurozone, for example, politicians are hiding the lack of growth behind a growing mountain of public debt and the GDP growth ain't even beating inflation since the 2008 crisis. In 2008 the eurozone represented about 25% of the world's GDP. Now it's not even 15% anymore.
Falling into irrelevancy doesn't begin to describe the state of things for the eurozone: from 25% of the world's GDP to less than 15% in 17 years is more than alarming.
And yet if you look at the eurozone in Euro, it looks like it's been growing since 2008. But it's actually been stuck since nearly two decades now and there aren't signs of anything getting any better in the eurozone. German carmarkers, the number one export of the eurozone, are in huge trouble (with China eating their lunch).
The US and China are, obviously, less fucked than the eurozone but the USA's growth has also been achieved at the cost of a runaway public debt and runaway inflation.
I don't know what protectionism can and cannot do for the US and it's not clear if manufacturing can really come back to the US but one thing is certain: the eurozone is a failure and whatever it is that they did or do should definitely not be copied. Unelected bureaucrats have managed, in 17 years, to drive the eurozone into the ground. It's mostly true for non-eurozone EU countries as well but some, like Poland (which is in the EU but not in the eurozone), are doing fine.
Basically: if you want to slash your part of the world's GDP by 40% in 17 years, do what the eurozone did.
Now we must understand this: the eurozone didn't just slash it's part of the global GDP by 40% in 17 years... They did so while, at the same time, creating a gigantic mountain of public debt and experiencing inflation.
Another 17 years of this, so another 40% loss, and the eurozone would only represent 9% of the world's GDP. And these unelected bureaucrats are so incompetent that I don't discard the possibility that they'll actually be able to crash the eurozone even faster than that. For example at the moment, while german carmarkers are in trouble, EU bureaucrats are hard at work trying to kill them for good.
Anti-americanism and anti-trumpism is a thing on HN but people should really look more closely at what's happening elsewhere.
What about an article from The Economist as to the reasons the eurozone managed to lose 40% of their share of the world's GDP since the 2008 financial crisis?
The point being is that the US should NOT follow ANY economic advice from EU leaders, it is a recipe for disaster.
One example is when the same stuff gets more expensive. If I have something, like a loaf of bread, a house, a smartphone all of them the exact same get more expensive, GDP increases if demand doesn't change (let's say because its inflexible).
You could argue this is due to some increased foreign demand for said product and the price increase legit represents increased economic output.
But in the case of tariffs for example, we know that's not the case - stuff became more expensive because of levied taxes. No new stuff got produced, no foreigners are buying up this stuff, demand likely decreased for said product, yet the GDP contribution increased.
Another very typical example are things with inflexible supply, such as housing, where due to the increased volume of money, the exact same house now costs more. But since transactions still happen, that means the economy got better, right?
Aren't they the same thing?
Italy's debt has ballooned to 150% of it's GDP, France is heading for 130% in the near future. Whatever happened in the EU, was not Germany's responsibility. Even Greece's debt is way higher than it should be after the Euro zone austerity "cure".
If there had been real austerity and real slashing of the national budgets so that all countries of the euro-zone actually complied with the fiscal pact that says that euro countries should not have a level of debt higher than 60% of it's GDP, then the Euro-zone would actually have some dry powder left to face these uncertain times.
Instead, the only country who seems to try to do something currently is Germany, precisely because it's debt is lower than most Euro-zone countries and therefore it can afford to spend more to try to create growth.
France is running 5%+++ deficit each year and it has not complied with the euro-zone fiscal rules for the last 20 years. Finland has 10% unemployment, Italy is not doing much better.
Where do these countries go from here? Do they cut social services and risk getting ousted in the next election? Do they borrow more and more with not much to show for it? That is the question that is facing these countries and nobody has the answers.
I don't disagree with the sentiment you expressed at all though.
In any case where the European union keeps failing is that it keeps not focusing on creating as many common rules and regulations across the EU, so, yet again, scaling your french business beyond your borders, or bulgarian one, is always very difficult.
Most countries in Europe are ridden by pointless nationalism on so many matters when our biggest issue is creating a strong internal market in Europe, but our biggest economies are still manufacturing and exporting ones, with little focus on the strengthening of our internal markets.
People forgot or simply don’t realize how much worse life was just a couple of decades ago (in terms of nutrition, access to knowledge, clean water, material wealth).
A lot of people in the world are angry and one of the things that fuels this anger is the "gaslighting" that the data shows their lives are better while their lived reality is the opposite.
Don't forget that Millennials are the first generation to be poorer than their parents in a long time...
There’s now a large segment (and several generations) of society for whom the system has never worked, even if the growth of retirement accounts masks the loss of wealth and well-being.
This is simply not true. At some point, we do need to rely on data other than "lived experience," which compares one's quality of life at 22 to someone's quality of life at 50.
"Younger Americans (millennials and Gen Zers) owned $1.23 for every $1 of wealth owned by Gen Xers at the same age."
"Younger Americans (millennials and Gen Zers) owned $1.35 for every $1 of wealth owned by baby boomers at the same age."
https://www.stlouisfed.org/open-vault/2025/june/the-state-of...
Statistically it's safer than rural Oklahoma... but your lived experience in taking the subway 45 minutes every day will not paint the same safety experience that can't be found in any statistic.
The most infuriating example, to me, is the overuse of GDP. As if that should tell us everything.
But pivoting to the "but it's not my lived experience, bro" is weak.
If you made the claim that "millenials have it harder than their parent" then we're talking something where experience can be more useful.
0: your source has mean at 34 in 2025, https://www.stlouisfed.org/open-vault/2025/june/the-state-of... 1: the best I could find was median at 38 in 2022: https://www.stlouisfed.org/on-the-economy/2024/feb/millennia...
I'm happy to be proven wrong.
Also, see what djtango said. It's not that simple.
I'm all for trying things for sure, but it has to be done in very small scale and over significant time scales.
― Mark Twain, A Connecticut Yankee in King Arthur's Court
Being pedantic about how we measure progress might create the impression that it’s not about the progress but instead about being right.
Couple decades ago Germany had electronics industry. Now it’s gone. More industries are following.
Couple decades ago there were rather isolated Yugoslav Wars. Now it’s introduction into WW3 with active war in Ukraine and hybrid attacks everywhere in Europe.
It depends heavily on location. Indian colleague has completely different world view and is proud how India is progressing.
> Couple decades ago there were rather isolated Yugoslav Wars.
A bit of nuance, they ended in 1999, however the whole thing is still influencing Europe negatively and is not as isolated as it seems. Not just there are now seven countries instead of one to consider and negotiate with, a couple of them are utterly disfunctional. Further, two biggest chunks are deeply sunk into nationalism. Far too little effort had been made back then to try to reform the place into a functional system.
In fact, in the vast majority of cases (including North America, South America, Europe, East Asia, India & South-East Asia) progress is entirely about countries choosing how quickly they are comfortable with improvement happening. Africa and the Middle East it is a combination of policy choices and cultural problems. Arguably foreign interference - although even then policy and strategy tends to be the bigger thing over time.
This is an extremely bold claim. Always was, but especially in today's world it is. I am not saying that Modi's policies are bad, what I am trying to say is that he is basically playing the game on the easy mode. He has access to the unprecedentely dynamic and resilient global economy _and_ he has access to cheap Russian resources Europe doesn't want to buy anymore. All Modi needs to do is not do anything really stupid - the economy will perform well unless clubbed to the head.
And that is all fine, and I am genuinely happy for India. My problem is that Modi is using that easily achieved success to erode democratic institutions - and that will become a problem in the long-term, as it always historically has, everywhere.
The world has been in easy mode for 70 years now. Any government can choose to sit back and let people get wealthy. It is literally so easy that even the communists figured it out.
The electronics industries of a couple decades ago were producing stuff that are incomparable to what we have today. Taking that into account, I would say today is "better".
It always is but not everyone has the option of buying. It takes investment and not everyone's parents are wealthy.
As always, local circumstances matter.
Some places like Austin, which haven't gone down the NIMBY zoning route, are still somewhat affordable.
Everybody mocked Russia for having the same gdp as Spain. As it turns out your economy is much stronger when it's focused on heavy industries, steel, mining, oil, &c. Than when it is focused on tourism and other services
One produces value, the other generates money, when shits hit the fan you need energy, the drunk brits coming in your strip clubs aren't that useful anymore
Do you think Spain would fair better than Russia against Ukraine ?
But you’re not taken into account how many men Russia is losing to maintain that level of aggression. It’s compensating its small GDP with humans.
Spain would never do that and thus fail.
How exactly is their economy "strong"? By what measure? You cannot really eat tanks, that is what made life in the Soviet Union unsatisfactory as well.
Current price of Ural oil is some 9 dollars above their breakeven costs. As the classic says, not great, not terrible.
Industry focused economies are going to continue to come under pressure due to automation. The US for example has a lot of industrial output, but shrinking industrial jobs. And that’s a good thing. Sending people into coal mines should never be a long term plan.
idk man, France's economy minister said he would bring "russia on its knees" economically, 3 years later it's still not anywhere close to being a reality, the minister isn't here anymore tho.
Put half of the sanctions on spain and it would fold in a month
On its own? Sure. (Although to be fair to Spain, they've invested heavily in solar and high-value agriculture in recent years).
But seen as part of a system with Germany and perhaps the UK (no longer part of the EU, but was better for both when they were), it's a valuable part of quality-of-life in the overall economic bloc.
Where would you rather live? Spain, easy.
Who would win in a war? Russia, easy.
Some will read this as an argument against the Spanish lifestyle. On balance I prefer to read it as an argument against war.
Really? Russia has not even done all that well against Ukraine, a much smaller economy.
What sort of war? I agree Spain could not successfully invade Russia, on the other hand Russia could not invade Spain either. No working aircraft carriers so their air force would be operating from very distant bases (even if they were allowed to pass over the countries in between), limits on ability to land large numbers of troops, etc.
> no longer part of the EU, but was better for both when they were
I do not understand why you even mention that as the EU does not have a military, NATO is relevant and the UK is in NATO.
Its a matter of opinion. I think the UK is at least as well off (growth has been similar to comparable economies like France and Germany since Brexit) without even seeing the long term benefits AND the EU is better off as the UK was a major impediment to the political integration the Euro zone needs.
Spain army's is 1/10th of Ukraine's and basically haven't been in anything close to a war in decades, so yes, really and easily lmao.
Ukraine alone produces more military drones per month than the entire EU per year btw.
They do not have a border with Russia so how could Russia get their army to Spain?
Ukraine has armed forces geared to fight a land war with Russia. How do Ukraine's air force and navy compare to Spain's?
> Ukraine alone produces more military drones per month than the entire EU per year btw.
Because they are in a war. You cannot compare fully geared up war time production to peacetime production. What was Ukraine's drone output prior to the current Russian invasion?
And mere decades ago, life was more or less the same, if not arguably better in many ways.
In advanced western countries that is. If you compare Nigeria from 2000 to Nigeria today, sure, maybe...
Infant mortality was 10.4 per 1,000 live births in 1986 in the US. It was 5.5 I'm 2023.
Life expectancy was 74. Now it's 78.
The crime rate peaked in the US in 1991.
Life isn't perfect now. Housing needs to be a lot more affordable, for one. University costs in the US are insane, for another.
But to paint this as no progress? Come on.
Are you just saying this thinking no one will ask you to back it up with data? Care to quantify what "so much better" actually means?
Most of those apply both here in Europe and the US.
And that's without even getting into more subjective QoL stuff, from cultural production to the widespread depression and the loneliness epidemic.
Robert F. Kennedy, Remarks at the University of Kansas, March 18, 1968
There’s a lot of work being done by the term “all other things being equal” when using a measure like GDP.
I don’t think we are in times when all else is equal.
And I don’t think anyone relies only on GDP. Typically you’d look at employment rates, inflation, etc.
Likewise for the bottom of the list it's an emphatic No.
Is it a completely accurate indicator? Probably not. Is it directionally accurate? Yes.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
GDP also ignores volunteer work and other non market transactions, completely dismisses externalities for health and the environment, and also has no indication of the distribution of said wealth.
Granted it might not be fine grained enough to distinguish between Number 4 and Number 5 on the list.
As someone who lived in a handful of countries with GDP per capita ranging from $3k to $70k I must say that GDP is a great proxy of the QoL and median citizen wealth. Not the only one and not the perfectly correlated one, but a very good one.
If their 401k is up, but so is cost of living and job prospects are down, most families are not invested enough to view that as a positive.
My parents fall into this trap, they keep telling me things have never been so bad yet they live materially better lives than their own parents and their children.
Taking Vanguard for example, VGS is global equities, but VGAD is global equities that are AUD-hedged (my home country).
The only downside is that you pay more in fees (and they're less tax efficient). People generally don't bother with it though, because on a long enough time-line currencies usually revert to their long-term average, so if you're holding for retirement there's generally little point.
This is a _huge_ downside for index funds, though. Even quite a small fee difference has a huge compounding impact over time; people often miss just how much.
AIUI, assuming you're investing in a global equity fund, currency hedging is almost never worth it. It _may_ be worth it in some cases if you're investing in a foreign index (eg S&P for Europeans), but even then not usually.
Ironically last year has been good for those who held EUR based or CHF based indexes.
It's more a psychological thing, you see absolute USD return and think you could've made that but there's not the actual return, your actual return is post conversion, if you'd have hedged you wouldn't have that abosulte return either, so you've never had it.
Additionally, if you're like most people and investing regularly or DCA-ing from now on you can buy at lower USD
It's the same as complaining that the temperature increased more in Fahrenheit than in Celsius.
EDIT: The total value is the same regardless of the fluctuations of currencies used to represent the value. Those are two independent issues.
Currencies fluctuate even if you keep them in checking accounts without investing them.
And yes, if you measure distance in feet, your son will go every year further away than you because his feet keep growing, while yours stay the same.
If I can say something has an "absolute" value of X, but I denominate it in USD, which is normally 1:1 to X, then it's value in USD in X.
but if USD drops to being worth half an X, but its absolute value hasn't changed, it will now appear to be worth 2X in USD.
so why can't one argue, if the dollar weakened by 15%, but everything else being equal, one would expect dollar denominated stocks to appreciate (in dollars) by the same amount? And if the dollar would strengthen, we would expect the stock price to depreciate?
The companies in the 500 are mostly global companies, if the USD shrunk so much they would either be losing money, or it doesn't matter because the US market is so strong it dwarfs the others.
Isn't that saying exactly what the parent comment mentioned? Since those companies are global, the growth of the S&P 500 which is USD denominated will track the devaluation of the USD as the underlying companies haven't lost value, the dollar has, and the S&P 500 would track that as growth in percentage to balance it.
I don't understand why they would be losing money since as you said they're global, and more untethered to the USD than the S&P 500.
Trump has made it clear he wants a cheaper dollar to make US exports more competitive and JPM is forecasting another 10% drop in the value of the dollar this year.
Just because the dollar and euro have been roughly level for over a decade doesn't mean that will remain true, currencies often go through pretty fast changes in relative values every few decades as their financial and geopolitical positions change. The pound drop around 2007~2009 is a good example of one such sudden but long term price shift.
> You're buying a share of productive capacity, the currency it is listed in doesn't matter.
But I don't own a fixed percentage of production, I own a fixed number of shares and the number of shares can change. If the number of shares doubles, then my investment is worth half as much.
How is that related to currency changes? That can happen anyway regardless of the currency.
Yeah, er, that's a very big if. There's no real reason to assume that, and history doesn't really bear it out.
If anything in the near term you'd probably expect the USD to weaken further vs the Euro; Trump seems _very_ keen to install a fed chair who'll cut rates even where not supported by inflation and employment numbers, whereas the ECB is more disciplined and less subject to political interference.
If you need to wait for it to recover you have lost money.
Besides, who says it will recover?
Celsius and Fahrenheit doesn't work as an analogy because the rate does not change over time as it does with currencies.
There may be some offset for goods imported from the US, but that's a minority of consumer goods globally, and even then, the purchase currency will usually still be the local fiat, and then the attractiveness of the US index fund still has to be weighed against the performance of non-US-based indices in that same local currency as opportunity cost.
I don't understand this question, are you asking if material goods and services in Europe, which uses EUR, "somewhat" follows the S&P, a US stock market index?
Do people do this? Up until some months ago, I was heavily invested in some US companies, and I never actually held USD in my accounts at any point. I used EUR to buy those stocks, the conversion happening together with the purchase, and same thing when I sold them, I received EUR ultimately.
I know I could have another account in my bank with USD set to the currency, I just don't know why'd anyone would want to, when you can convert at the point of sale/purchase. Of course, if you're doing forex trading or whatever, that might make sense, but I don't think generally people hold USD to buy/sell US stocks, because you don't have to.
Approximately no individual does this. Some companies may hold some foreign currency reserves, but even there it is not _particularly_ common in most cases.
As a European, I have never, in 40 years, had any USD, except a small amount of paper currency. If I'm buying something made in the US, I'm probably buying from a local vendor, or else will convert on the fly. If I'm visiting the US, I'll convert on the fly (this is even cheap, now, thanks to neo-banks). I own a bunch of US equity, but indirectly via a euro-denominated global market index fund. This is fairly standard. In general it's only common for individuals to hold foreign currency where the local currency is particularly unstable.
... Wait, why would you expect the price of goods to follow the valuation of, well, any market index, never mind one specific foreign market index? Like, I don't understand why you think that would happen. If anything, you'd expect a minor inverse relationship, at least on a global scale; rapid growth of cost of goods indicates inflation, which implies central bank tightening, which tends to depress stock values a bit.
Inversely, as a US investor, if you invested 100€ in the eurostoxx 50, your pile of money would have grown to about $140 (20% index growth, 15% dollar debasement). It absolutely makes a difference, that's $20 more in your pocket compared to the index.
Your comparison with temperatures is wrong. Celsius and Fahrenheit are fixed units, whereas the value of currencies fluctuate.
If you want to talk about EURUSD then just state it.
> It's the same as complaining that the temperature increased more in Fahrenheit than in Celsius.
No, that logic is flawed. Fahrenheit and Celsius are pegged to each other, the Euro and the USD are not.
MSCI EM has outperformed MSCI US since it's inception in 2001 if you look at total return.
There's also some other interesting aspects of emerging markets specifically: they never went more than 4.5 years before recovering from a crash to ath, whereas it took the SP500 12 years and EU 600 index 14 to recover from the 2000 one.
There’s a stronger argument to be made for small caps, but stock buybacks allow any company’s stock to effectively experience exponential growth even with flat earnings. IE there’s little long term difference between buying back 2% a stock every year and ~2% actual growth every year assuming you never hold the majority of shares. (as in 1/0.98 ~= 1.02)
Not sure what are you trying to say.
Plenty of companies listed on foreign exchanges make the majority of their money from the US market etc.
Nope. A more accurate description is saying you’re buying into a specific subset of a Market by buying shares of specific companies. Hand waving them as if they are the same thing doesn’t actually make them the same thing.
The MSCI EM, SP500, etc etc are simply a collection of public companies not the market of a given country. Which is why index funds all behave in fundamentally different ways than the actual markets we’re talking about.
Now if you do want more exposure to the upsides of a growing economy there are options, it’s just not a simple as buying an index fund.
This thread is about indexes and it started by a user stating that emerging markets indexes have been in line or outpaced global and even most of the advanced economies ones.
Your previous statement about why in general they would have an advantage was inaccurate. As you have seemingly realized.
I mean, we're talking about index funds, where you essentially are buying a market.
For one thing you’re only buying public companies, that in and of itself is a significant difference.
They are correct that the technocratic managerialists on the past century have failed — and failed in a way damaging to the state/nation. (For US and EU at least.) In so far as we’re all discussing that (and have been for several years), they’ve been wildly successful.
I am not a supporter of Nigel Farage and his many different parties in the UK ('Reform' just being the latest incarnation), and I don't believe his policies offer any real answers.
But what the rise of Reform does show us is the utter disillusionment with the mainstream parties of the UK, who have spent the last several decades afraid to make meaningful changes. They tell people they can't have what they want because it would be too risky/expensive/whatever. We can't do that, the bond markets won't like it. We're running high on debt so we can't afford to make this better. Here, I'm going to add 0.4% to this tax so we can give this service an extra 0.3% budget.
All the while government takes more in tax every year but the country feels like it's in a state of managed decline as services struggle. People wonder where all the money is going and there's no particularly good answer. And the managerial politicians' cautious approach hasn't led to economic growth either, so people don't feel like things are getting any easier.
With that background it's hardly surprising that the populace flock to someone loudly offering change, even if it's bullshit change.
(I left the UK a few years ago but I do visit and keep up on the news. Australia is on a similar path but less extreme, though with accelerating house prices and other forms of inequality, and the collapse of our traditional centre-right, expect things to get more populist in the coming years)
> I don't believe his policies offer any real answers.
Indeed, it's a shame that people are too dumb to realise they're just lining themselves up to be fleeced by a different "elite", instead of actual change.
They simply want to have their cake and eat it too. Plenty of times post-GFC where parties have tried or proposed much needed reform only for the voters, gerrymandered by the press, to throw their toys out of the pram. Theresa May’s “demantia tax”, Starmer’s winter fuel allowance for example.
Sadly it feels like it’ll probably be taken out of everyone’s hand, through some sort of economic crash or worse, to get people to be realistic again.
To me this is a prime example of the problem - they were really just fucking around at the edges anyway. It wasn't any sort of major reform. That old scene from Futurama often springs to mind -
"I say that your 3% Titanium tax goes too far!"
"And I say that your 3% Titanium tax doesn't go too far enough!"
I do agree the press are complicit though.
Which will disabuse you of the notion that we are "high on debt". "high on savings" perhaps.
We can always afford to make things better. Afford is never the issue.
Political will to take on the vested interests is the issue.
The answer is welfare. That is the original sin of all of this, and the one people refuse to acknowledge.
You need to let people fail.
The UK does have an issue with a lowering number of people in productive work and ever more on various kinds of disability payout, it's true, but this -
> You need to let people fail.
Doesn't really follow.
Social protection - 400 b
personal social services - 54b
health - 294b
Education - 145b
industry agriculture and employment - 51b
housing and environment - 51 billion
That accounts for roughly 70% of public sector spending, not 33%.
https://www.gov.uk/government/publications/budget-2025-docum...
0% insight there then.
It’s hard to deal with that when people have been paying into the system for their whole working lives on the promise that they will be looked after in old age.
It’s hard to see how you can fix this whilst pensioners continue to vote whilst young people don’t.
They weren't paying "into the system". They were being taxed.
Treat it for what it was, and stop feeding the pyramid scheme.
It might have been better not to make that promise but you can’t blame people for accepting it.
Stop justifying pyramid schemes.
It’s too late, those promises have been made. We have to lie in the bed we made.
All you can do is stop making future promises.
And this is not aimed at you, but I do see all too often that people in the more mainstream spaces look at that side of the coin exclusively. "They're supporting reform because they're racist/stupid/brainwashed/propagandised". Sure, sure, those are definitely factors. But the opportunity to do that brainwashing and propagandising is there for a reason.
That's because people don't want to open their eyes, it's mostly going in pensions and public services and is increasingly more paid with debt.
As for decades and decades politicians have avoided to become unpopular by raising pension ages (or did it way too slowly), those are the results.
Look at what happened in France under Macron when he raised pension age or tried to stop the bleeding in public financing: raise in national populism yet again, as if the far right in France (or the far left) had some magic wand (same for reform UK) to stop the bleeding.
Actually, if you look at the rightist populist across Europe (Poland, Hungary, Italy) they made the problems worse by actually jumping into very (historically) leftist measures such as throwing even more money at the public (benefits, pensions) at the expense of public debt.
Poland feels it slightly less because it has more growth (largely attributed to the nearly 2 millions of Ukrainians that settled there bringing with them their skills and tons of money).
We come from decades if not a century of spectacular growth and yet "technocratic managerialists have failed", what, where, how?
The United States comes out of 25 years of unprecedented growth, in spite of two major economical recessions and has outpaced the majority of advanced economies.
There’s prolific ink spilled on the failures of technocratic managerialism over the past 40 years as gain become decoupled — and particularly over the past decade as the breakdown has reached critical mass.
Do not "do not mistake..." ...
Yes.
The rare earths situation is embarrassing. This has been a political football for years now, but the efforts to fix it aren't working very well.
First, you need a mine site and a mine. The US has a big one at Mountain Pass, California, and it's producing. But in the past twenty years, it's gone bankrupt twice and has been through three owners, because there were a few rare earth gluts and the price crashed. Also, they once had a big spill from a retention pond, and that was expensive.
Mountain Pass isn't the only ore deposit in the US. There's what's supposed to be a good one in Montana. But the company developing it has been doing "studies" since at least 2023.[2] There are a few other rare earth "mining" companies which don't produce anything yet. There's one in Tennessee with a "definitive feasibility study" underway. I'm tempted to say that the real product is the stock. Anyway, it's not like there's a need to go to Ukraine or Greenland for rare earths. It's all available in the US, with a decent climate, good road access, and no wars.
Second, you need a beneficiation plant at the mine. This takes in rock and dirt, pulls out ore with a reasonable fraction of rare earths, and outputs almost as much waste as it takes in ore. This is a somewhat messy process. In China, the settling ponds are visible from space. Mountain Pass has a better process (the Sierra Club approves) and doesn't make such a mess. The waste is dried, the fluids are reused, and the dry waste can be put back where it came from eventually. This is now a known technology and is being replicated at some Australian mines.
Then you need a separating plant, where the actual rare earths are separated out. The US has very little capability in this area. Not for any good reason. There's a small startup.[1] They're slowly scaling up. Production in 2027. There's another startup, Medallion (then Gabo, then Gamma) which has been fooling around since 2020 without building much. That's one of those companies where you read five years of press releases and they're all about financing, reorgs, and management changes, with no actual product. Here's another one, RER. They've been at this since 2021, and they have a little demo plant in Wyoming.[3]
Then you need a smelting and magnet making plant. This is a modest size operation, because it processes tons, not millions of tons, of material. One has been built in an industrial park in Texas. That took funding from DoD and General Motors. Not big enough to replace all imported magnets.
This is US postmodern capitalism. The US financial system just doesn't seem to be able to bring a complicated heavy industrial project to completion in a reasonable period of time.
[1] https://rareearthexchanges.com/news/ucore-secures-18-4m-dod-...
China's industrial central planning has no problem doing this. Where there's been progress in the US, it's been because big customers, DoD and General Motors, pushed.
This is a nice example to look at closely. People in US politics have been screaming about rare earth problems for a decade now. It's not a resource problem. It's a capitalism problem.
If the free market economy is so resilient to threats, why didn't it thrive also in 2008?
Free markets are on balance a good thing, assuming a level playing field and regulations to curb externalization and monopolization as well as cartel forming.
Saying that these are then not free markets is a fairly hardcore libertarian viewpoint, which tries to make it a 'black and white' issue, whereas in reality things are often more nuanced.
There are threats, the economic data falls into the gutter, but eventually recovers (not without real and quite lasting negative consequences for many people) -> the free market works great because hey, if you held SP500 you were still fine in the long run.
It's like a religion. If things go well it's thanks to God, if things go wrong maybe God is testing or punishing you but all will eventually be fine (in the worst case, after death). The free market is a lot like a god for its followers.
Despite the severity of what happened, jobs rapidly recovered and were around the same pre-financial crisis levels (and well above US averages) in a matter of few years and workers earnings were at or above 2008 levels (inflation adjusted) by 2016.
All in all, as severe 2008 was, I don't see how free market economy made it more, rather than less severe. It's at best an opinion.
The rest of the market recovered quickly once the government re-arranged debt and prevented a full collapse.
But the lesson was that private debt was accumulating too quickly on a shaky basis, catalyzed by financial markets making the issue orders of magnitudes worse. Rapid private debt accumulation is still not discussed enough today for my taste.
Jobs remain. I've learned to differentiate survival from renewal.
Surviving is the ability to withstand shocks and not break. Renewing is the ability to rebuild and strengthen so that the next shock is less painful.
Most policies focus on the former. The latter is far more difficult. It is slower and easier to postpone. Protectionism is a classic example. It keeps the numbers stable in the short run but it means there is often less incentive to improve productivity, skills and supply chains. On the surface it all looks fine, but nothing gets better.
A new guide for me is if a policy makes it easier to be static, it is probably not progress. I wonder if others think the same. What signs indicate that renewal is underway? When has buying time worked? What is more important than growth?
Reduce lightning strikes and increase rate of tree growth, no idea if it applies here as much?
Black swan[1] talks about this and the housing crisis was a significant event, but you can make an argument against this position as well
-[0]: https://www.veritasium.com/simulation5
-[1]: https://en.wikipedia.org/wiki/The_Black_Swan:_The_Impact_of_...
The fear now comes in the rock and a hard place issue that is ongoing here, whereby interest rates/monetary policy are arguably still not in restrictive territory enough that if a downturn was to occur, our coping tool is to loosen policy further but that would likely stoke further asset inflation and potentially general inflation compounding other issues.
It's why you get more leaning to the view that it might be necessary to just let things fail as a resetting mechanism, which I'm personally not sure about.
"I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self melt away."
India's IT outsourcing-led GDP growth can benefit many almost-poor and poor people by giving them access to more spending by the "middle-class" (a very debatable minority in India) and the rich. But it will not benefit the poorest - social welfare schemes do that, but anti-homeless measures cancel it out. Access to formalised lending can do that, but anti-immigrant schemes and the Kafkaesque labyrinth of getting an id-card in India will negate that. And banks won't give you a loan if you're poor (so they go to loansharks).
You can have all the Apples and the Facebooks of the world in California, but putting spikes in places where homeless people could sleep makes Gandhi's talisman stand out far better than any macro-economic indicator.
Inflation can be positive or negative but if you're living in a place with less supply than demand, your rent will go up by far more than the price of eggs. This will hurt you completely independently of the price of eggs.
All this to say - if you care about the poorest, you'll find little to cheer about. But should you care about the poorest? Is that a good measure of healthy economic growth? Is economic growth the only priority after 1991?
You can be poor and destitute in a capitalist dystopia and you can be poor and destitute in a communist dystopia. This is why I hate the language of the Cold War so much - we lose an infinite amount of nuance with terms like "Capitalism" "socialism" "communism" and "GDP"
Can you explain what you mean by anti-homeless measures ?
Trans: The facts do not match the Economist's predictions, and therefore the facts are wrong.
You know.. it is a little hard to take legacy media seriously if the reporting they do amounts to:
'economy is working, but it is not thanks to ANYTHING Trump does'
Give him some credit; try to make it believable.
_wire_•15h ago