Opinion

Rising sea levels have a significant impact on global climate, influencing weather patterns, ecosystems, and human communities.Higher sea levels often lead to more powerful and frequent coastal storms, such as hurricanes and typhoons. These storms may become destructive due to the higher starting point of storm surges.As sea levels rise, the distribution of heat in the oceans changes, which may disrupt major ocean currents like the Gulf Stream. This can alter global climate patterns, potentially leading to changes in temperature and precipitation in various regions.Rising seas inundate coastal wetlands, mangroves, and estuaries, which are crucial for biodiversity.As sea levels rise, saltwater infiltrate freshwater systems, including rivers and aquifers. This harms freshwater species and disrupt agricultural practices dependent on freshwater.Higher sea levels increase the risk of coastal erosion and permanent flooding, threatening infrastructure, homes, and livelihoods. Low-lying areas and small island nations are particularly vulnerable.In many parts of the world, especially in the Pacific Islands, rising seas have forced millions of people to relocate, leading to climate-induced migration. Such incidents have seen straining resources in receiving areas and contributing to social and political tensions.According to the United Nations Secretary-General Antonio Guterres, ocean temperatures are rising in the Pacific Islands at three times the rate worldwide, and its population was “uniquely exposed” to the impact of rising sea levels.At the Pacific Islands Forum in Tonga recently, Guterres highlighted the findings of a report that showed the South West Pacific was worst hit by sea level rises, in some places by more than double the global average in the past 30 years.“Rising seas are amplifying the frequency and severity of storm surges and coastal flooding. These floods swamp coastal communities. Ruin fisheries. Damage crops. Contaminate fresh water. All this puts Pacific Island nations in grave danger,” he said.Water expands as it warms, contributing to sea level rise, he said.He called for global leaders to “massively boost climate adaptation investments” in vulnerable countries.A “loss and damage” fund to help poor nations cope with costly climate disasters was approved at last year’s UN climate summit, after years of lobbying by groups including the Pacific Islands, opens new tab, but the challenge remains to attract significant contributions to the fund from wealthier nations.“Developed countries must deliver on their finance commitments – including the commitment to double adaptation finance to at least $40bn a year by 2025,” Guterres noted.Many scientists blame the planet’s rising temperatures on pollution from fossil fuel use. Guterres said the Pacific Islands can expect additional sea level rise of 15 centimetres by 2050 if the pollution levels do not drop.Guterres urged world leaders to greatly increase the level of climate-related investments, especially for at-risk countries, to help fight the problem.Rising sea levels are both a consequence and a driver of global climate change, with far-reaching implications for the environment, human societies, and the global economy at large.Undoubtedly, rising sea levels complicate efforts to mitigate climate change.Addressing this issue requires comprehensive strategies that include mitigation, adaptation, and resilience-building.

Six months ago, Prime Minister Sheikh Hasina’s grip on power in Bangladesh appeared unbreakable. The ruling Awami League had just won a fourth successive term in an uncontested election, allowing it to remain in full control of the country’s institutions. With journalists, human-rights defenders, opposition members, and other critics facing politically motivated prosecution, prison, exile, and forced disappearance, the country’s continued descent into authoritarianism seemed certain.But suddenly, in July, student-led protests erupted across the country, fuelled by outrage over a quota system that allocates government jobs to the ruling party’s allies. The state’s response – a violent crackdown that claimed more than 400 lives – revealed the brittleness of Hasina’s 15-year rule. In scenes reminiscent of the Sri Lankan “Aragalaya” mass protests that ended the rule of the Rajapaksa family in 2022, young Bangladeshis forced Hasina to resign and flee into exile.Bangladesh is the latest in a series of youth-driven uprisings that have shaken countries in Asia and Africa this year. In February, young Pakistanis delivered a shock result when, defying the military, they voted en masse for the imprisoned former prime minister Imran Khan, giving his allies the highest number of votes and seats in parliament.The following month, young Senegalese voters reclaimed their democracy in an election that was nearly stolen from them. Bassirou Diomaye Faye, a little-known tax inspector, was catapulted from prison to the presidency in the space of just a few weeks.Then, in June, the tremors reached Kenya, where protesters, proudly identifying themselves as “Gen Z”, took to the streets to express their outrage against President William Ruto’s plan to introduce new taxes on essential items. As in Bangladesh, the authorities responded with lethal violence, killing dozens and injuring hundreds. Ultimately, though, Ruto was forced to withdraw the bill. Now attention has turned to Nigeria, which has been jolted by protests over the rising cost of living.A new generation is asserting itself in parts of Asia and Africa. Young people are spontaneously forming protest movements and forging rare coalitions. This is the first generation that has not known life before the internet, and they are using social media not just to announce and live-stream street protests, but also to organise and debate.In the process, they are devising innovative tactics, including the use of artificial intelligence, and creating new spaces by holding digital demonstrations when the streets are closed off to them. In response, governments have unleashed their own techno-repression, from throttling the internet to shutting it down altogether.These movements also are unsettling conventional views of politics, transcending traditional ethnic and political divides, and often shunning traditional political parties and civil-society organisations. It is typically assumed that populism and authoritarianism are complementary forces, yet here we see expressions of populism challenging authoritarianism – and by a generation that is proving to be both fearless and uncompromising. Far from deterring them, state violence has often hardened their resolve.Of course, it would be a mistake to overstate this “youthquake” or to generalise across two vast continents. Gen-Z protesters are not monolithic, nor are they all idealistic in their ambitions. Like any other age cohort, the young are politically divided. In Bangladesh, for example, the ruling party’s thuggish youth wing, the Chhatra League, was partly responsible for the violence.While Senegal had a relatively smooth transition, owing to the resilience of its institutions, Bangladesh is on a more uncertain path, with the threat of violence and civil disorder still hanging over the country. Recent reprisals against members of the Awami League and attacks on the Hindu minority show how the taste of victory can lead some to temptations of vengeance.Nonetheless, there are striking similarities. In each case mentioned above, people between the ages of 15 and 34 constitute at least one-third of the total population. Despite strong economic growth of around 6% per year, Bangladesh struggles with 15% youth unemployment. And many of these countries are weighed down by heavy debt burdens, using between 20% and 60% of government expenditures to keep their creditors at bay – a sum that dwarfs public spending on education, health, and urgently needed climate action.It’s no coincidence that these protests are taking place in some of the most climate-vulnerable countries in the world.The protests were sparked in many cases by the announcement of new measures that would have inflicted more economic pain on young people – whether it was regressive taxes in Kenya, the unfair allocation of jobs in Bangladesh, or the rising cost of living in Nigeria. But these moves merely set aflame a tinderbox of grievances that had accumulated over decades. Young people are despairing not just the lack of economic prospects, but also their rulers’ greed, the state’s brutality, and a general unresponsiveness to their needs. There is an impatience with the status quo. They want to sweep away old, outdated orders and reimagine their political systems.But this change will not come easily, nor is it guaranteed. A decade ago, youthful revolts also broke out across the Arab world, toppling dictatorships and rousing hopes for a more just and equitable order. To avoid those failures, the openings this moment has created will have to quickly be seized and built upon – and the dangers will have to be carefully navigated. — Project Syndicate• Binaifer Nowrojee is President of the Open Society Foundations.

Britain’s Labour government is drawing up a new, cost-cutting artificial intelligence (AI) strategy ahead of a crunch autumn budget — prioritising public sector adoption of the technology over direct investment into industry.Since taking office in July, Prime Minister Keir Starmer’s government has been reviewing the costs of AI. It has already scrapped a planned £1.3bn ($1.72bn) worth of investment in related technologies — drawn up by the previous Conservative government — including an £800mn investment promised to develop a supercomputer at the University of Edinburgh.While £1.3bn is a relatively small sum in the wider AI landscape, Starmer’s government faced backlash from industry leaders who said it signals that Britain is becoming less interested in supporting innovation.By comparison France, which is building a reputation as a European hub for generative AI, recently committed €2.5bn ($2.77bn) to invest in developing the technology domestically.The British government is also considering scrapping a planned San Francisco office for its AI Safety Institute, according to one source close to the Department for Science, Innovation and Technology (DSIT). The office was originally due to open over the summer, and would have seen staff hired in line with market rates, estimated at upwards of $100,000 each.“Labour always needs to somehow look different to the Tories, and reining in the AI safety stuff, the focus on existential risks, is an easy way to do that,” the source said.Signalling a change of direction, tech minister Peter Kyle in July sacked one of the co-founders of the AI Safety Institute, Nitarshan Rajkumar, from his role as a senior policy adviser, according to three sources close to the DSIT.While it is not unusual for a new administration to bring in its own advisers, some in the industry see the sacking as an unforced error. Rajkumar announced his departure from DSIT on social media platform X, but did not say his contract had been terminated.“Huge loss to the UK civil service,” Jordan Sullivan, of lobby group Startup Coalition, wrote on X shortly after. “Just the sort of person we should be doing a huge amount to keep inside the tent.” Around the same time, Labour recruited Matt Clifford, a tech entrepreneur and chief organiser of last year’s AI Safety Summit under Conservative leader Rishi Sunak, to devise a new strategy. Clifford is expected to deliver the plan in September, the source said, ahead of the government’s Autumn Statement the following month.A government spokesperson said it recognised the transformative power of AI and remained committed to harnessing the technology to deliver growth and create opportunities for people across the UK.Tech minister Kyle aims to drive AI adoption in the public sector as a means of improving efficiency and reducing costs, while cutting back the government’s direct investments into industry, according to the three sources.Britain hosted the world’s first AI Safety Summit in Bletchley Park last November, drawing world leaders like Kamala Harris and tech moguls such as Elon Musk and Sam Altman.Fears around AI’s catastrophic potential spread after Microsoft-backed OpenAI released ChatGPT to the public in November 2022, but these need to be balanced against the technology’s positive aspects.The DSIT has also started fielding applications for economists to model how widespread AI will impact Britain, according to a job description seen by Reuters.In a previously unreported meeting in Downing Street last week, Clifford hosted around 10 representatives from some of the world’s biggest venture capital firms — including Index Ventures, Lightspeed Venture Partners, and Sequoia Capital — to discuss the government’s AI strategy. — Reuters

As temperatures soar and tourist arrivals swell, Greece is under pressure to reimagine a tourism model that climate change is making increasingly untenable.With its turquoise waters and reliable sunshine, Greece has long been a popular holiday destination, attracting nearly 33mn visitors last year and generating €28.5bn in revenue ($31.7bn).This year’s total visitor numbers are expected to rise further, as global tourism sets new records from pre-pandemic levels, but the surge in holidaymakers could undermine the economic mainstay in the near future.Anger over “overtourism” has even sparked protests in recent years on the beaches of the Cyclades, a collection of Aegean islands.“People in Greece are getting more concerned that the (Cycladic islands) are changing very rapidly and, in a few years, what is special is going to be lost,” said Dimitris Vayanos, an economist at the London School of Economics.Greece is not alone. Residents in other popular European destinations say visitors are harming the environment and local economies, particularly as short-term rentals from home-stay websites like Airbnb drive up housing costs and price people out of their towns and cities.But Greece is among Europe’s hardest-hit countries by global warming, and rising sea levels, scorching heatwaves, erratic rainfall and frequent wildfires are changing the landscape.Tourism is placing an extra burden on scarce water resources and threatening fragile coastal environments, leading to calls from local authorities and the national ombudsman to regulate construction, restrict tourist flows and invest in water management and infrastructure.The government has to balance mitigating these threats against protecting critical tourism earnings. Tourism contributes between €62.8bn euros and €75.6bn to the Greek economy, roughly a third of gross domestic product annually, according to the Hellenic Tourism Business Association (INSETE).A law in July updated regulations for tourism agencies, guides and rentals that Tourism Minister Olga Kefalogianni has said will make the country a “global tourism power,” part of “critically important” efforts to safeguard the industry and benefit the economy.But climate change poses existential questions for the industry.A lengthy heatwave in June, followed by the hottest July on record, forced tourist attractions to close and caused a spate of heat-related deaths.Wildfires, made more intense and frequent by hotter, drier weather linked to climate change, also threaten the tourism industry. A massive blaze earlier this month came within miles of the capital Athens.Last year, more than 8,000 forest fires raged across the country, and thousands of tourists had to be evacuated from islands, including Rhodes.“What we want to see is that tourism is sustainable or even regenerative. It has to invest in conservation of the ecosystem, and it has to assist with the cost of managing the tourists on the ground,” said Megan Epler Wood, director of the Sustainable Tourism Asset Management Program (STAMP) at Cornell University in the US.The ombudsman, a Greek official who investigates public complaints, said in a June report the country needs to reduce construction and protect water resources and coastal areas to maintain healthy tourism.It warned of the growing environmental risks from tourism, particularly the additional demands on water supplies for drinking, swimming pools and water parks.A pilot study, carried out by Greek researchers and Unesco, the UN cultural agency, found that smaller islands in the Aegean Sea already need double the amount of water they can naturally produce to meet demand from tourists, which is set to increase twofold by 2030.“The more these islands are developed, the less attractive they will be to visitors,” said Vayanos.Greece should tailor tourism to make it more compatible with environmental standards, including the use of zoning, and concentrate development in specific areas, he said.The introduction this year of a tourist tax, dubbed the climate resilience fee, is meant to help finance recovery from worsening forest fires and floods.The fee for guests staying in hotels and short-term rentals is expected to generate up to €300mn in additional revenue in 2024.But Epler Wood said that historically, tourist taxes have gone towards destination marketing rather than benefitting local communities. Research by STAMP found water, waste, energy utilities and affordable housing often did not gain at all.The Central Union of Greek Municipalities (KEDE) is calling for the revenue from the tax go to local government to help them manage tourists.There is also little evidence that tourism taxes reduce arrivals, according to a report by strategy company Group NAO.Nikos Zorzos, the mayor of Santorini, wants to cap the number of daily cruise-ship visitors at 8,000 from as many as 17,000 people.The impact of climate change in Greece is not limited to rising temperatures and other extreme weather events.Coastal erosion and declining seagrass meadows, which help give the Mediterranean Sea its characteristic turquoise colour, were identified in addition to floods, water shortages, high temperatures and drought as threats to tourism in an INSETE report.“As summers will be hotter, extending the tourist season should be a priority by designing high-quality offerings to attract visitors throughout the year. Only in this way can we ensure sustainable and competitive tourism for Greece,” an INSETE spokesperson told the Thomson Reuters Foundation.

A year after Ecuador voted in a historic referendum to ban all oil drilling in a unique part of the Amazon rainforest, Indigenous leaders say the government has been slow to shut down wells in the oil-dependent South American nation.On Aug 20, 2023, more than 10mn people — almost 60% — voted to keep crude in the ground in the Yasuni national park in the Amazon.The referendum was hailed by environmentalists and Indigenous communities as a landmark victory to protect one of the world’s most biodiverse regions and a rare example of the world shifting away from a fossil-fuel based economy.Since the Amazon rainforest absorbs vast amounts of carbon dioxide, it is key in shaping the Earth’s climate and is a vital weapon to slow climate change.The vote called on the state oil firm, Petroecuador, to dismantle and shut operations at its Yasuni ‘43-ITT’ oil block in a “progressive and orderly” and then restore the area.Ecuador’s constitutional court ruled last year that Petroecuador had one year to remove infrastructure at the block.But oil is still being pumped in an area that produces some 58,000 barrels a day, and all the fulsome government pledges to act have yielded little progress, Indigenous leaders said.“It’s very worrying. The machinery is still there, so where’s the commitment from the government?” said Nemonte Nenquimo, a leader of the Waorani Indigenous people, whose ancestral lands lie in the Yasuni rainforest.“It’s been a year, and the government hasn’t complied,” Nenquimo told the Thomson Reuters Foundation.The government is at pains to show it is stepping up its efforts to withdraw from all oil activity in the zone and said “its commitment to honour the (referendum) decision remains firm,” according to an Aug 20 government statement.The Energy Ministry said it had closed one of the 247 wells in the block earlier this week, part of a phase-out plan expected to take around five-and-a-half years.Ecuador’s Energy Minister Fernando Santos has estimated dismantling operations would cost $600mn.“The government is making a mockery of the public referendum by saying the process is complex and costly and could now take between three to five years,” said Fernando Munoz, a spokesperson for Yasunidos, an Ecuadorian environmental group, which began pushing for the referendum a decade ago.“We understand that it’s not possible to shut the key and stop oil production overnight, but there’s no timetable for a gradual and orderly shutdown,” he said.The wells should all go offline by December 2029, the government has said, but removing all the infrastructure at the block could take until August 2030.Ecuador produces about 500,000 barrels of crude a day, and oil revenue — vital to its stretched government — makes up nearly 3% of the country’s gross domestic product.Plans to shutter oil production could be hampered by urgent security challenges facing President Daniel Noboa, who in January declared Ecuador was at war with criminal gangs.Noboa has also floated the idea of postponing the closure, citing the need to fund his crackdown on drug-fuelled gang violence.“As the country faces economic and security crises, the oil industry and its supporters in government have been pushing hard to disregard the popular vote,” said Mitch Anderson, co-founder of advocacy group Amazon Frontlines.UN experts have also backed calls for action on the referendum result, urging the Ecuadorian government to “urgently implement the will of the people”.“Ecuador should prioritise protecting the climate, the environment and Indigenous Peoples who depend on it and shift away from an economic model based on depleting natural resources and fossil fuel extraction,” a group of UN experts said in a statement on Aug. 20.Preserving the Amazon, the world’s largest tropical rainforest, is vital to curbing runaway climate change.Scientists say climate change, deforestation and fires are all helping push the Amazon to a “tipping point” that threatens to alter the forest irreparably.Indigenous groups have campaigned for decades to keep oil companies out of their home so as to protect local nature, along with several communities who live there in voluntary isolation.They say Indigenous communities have not benefited from oil and that building roads and rigs has led to deforestation and environmental damage, be it oil spills or air pollution.“Yasuni is a territory of great biodiversity. What happens here affects the climate change crisis and the planet,” said Ene Nenquimo, vice-president of the Waorani Nation of Ecuador, one of several Indigenous organisations demanding action.In May, the government set up a ministerial commission to oversee the closure; the panel includes Petroecuador, but Indigenous people were given no seat at the table.“As owners of the land, the government should ask us Waorani what happens on our land,” Ene Nenquimo said.But Ecuador relies on crude exports to prop up its economy.Petroecuador has said ending exploration in Yasuni would cost Ecuador some $13.8bn over two decades and cut 12% of the country’s 480,000 barrels per day (bpd) oil production.Losses from oil revenue could be partly offset by comprehensive tax reform, “based on the principle that those who earn more should pay more tax,” said Munoz, the academic.“There should be an open public debate about the need to carry out a just transition and how to sustain an economy without oil as reserves run dry,” he added.Indigenous organisations are considering taking the issue to the Inter-American Commission on Human Rights to ensure the government complies with the referendum result.“We’ll not sit with our arms crossed,” said Ene Nenquimo. — Thomson Reuters Foundation

The lawyers who sued successfully to void Tesla CEO Elon Musk’s $56bn pay package are seeking a record $6bn in fees, and the judge who will decide the amount got some unsolicited guidance this month from the state’s top court: Do not give windfalls.Chancellor Kathaleen McCormick of Delaware’s Court of Chancery is weighing two decisions that will have a multibillion-dollar impact on Tesla and its investors. One issue is the request for the huge fee for voiding Musk’s pay. The other is whether a June vote by Tesla shareholders actually restored the pay package, in which case a large fee may not be appropriate.McCormick got a reminder on Aug 14 from her bosses on the state’s high court in an unrelated case that big legal fees help motivate shareholder attorneys to get great results. In affirming a $267mn fee, one of the largest ever in shareholder litigation, the justices also cautioned that at some point those type of paydays can “turn into a windfall.” Legal experts said the justices likely had the Musk case in mind.“They are making it clear, to McCormick and anyone else, that certainly an extremely high fee, an eye-popping fee, a ‘wow’ fee, is appropriate, but there is a line where it’s simply past what is necessary to incentivise high-risk cases,” said Ann Lipton, a professor at Tulane Law School.The case over Musk’s compensation began in 2018 when shareholder Richard Tornetta sued Tesla’s directors for approving Musk’s pay package, which granted the billionaire CEO stock options as the electric carmaker hit various goals. Musk did not get a guaranteed salary and the options soared in value as the stock rose 10 fold.In January, McCormick sided with Tornetta, finding Musk controlled the pay negotiations. She called the $56bn compensation “unfathomable” and decided it should be rescinded.The shareholder lawyers at Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both of New York, and Andrews & Springer of Wilmington, Delaware, have worked without pay since they filed the case, with the understanding they would get part of the recovery. The case was brought to benefit Tesla, so the company is going to pay the fee.The firms asked McCormick in March to approve a “conservative” fee of 11% of the stock that Musk would have gotten if he had won the case. The request works out to 29mn shares, worth almost $6bn at Wednesday’s closing price of $205.75. Alternatively, they said they would take a cash fee of $1bn.If the amount of the fee request was unprecedented, Tornetta’s attorneys said, it was because they won arguably the largest judgment in US history. They noted that Delaware courts reward higher percentages of a judgment or settlement when attorneys battled deep into a case. They said precedent supported a fee request of as much as 33%.Delaware judges also look at the time and effort of the lawyers as a way to spot a potential windfall. By this measure, the size of the fee request by Tornetta’s lawyers is stunning.Their fee equals more than $280,000 an hour for each of the 19,500 hours worked on the case by every attorney, associate and paralegal.The highest-paid attorneys on the case normally bill $1,150 an hour while on the low end some contract attorneys and paralegals charge $250 an hour, according to court filings. The Delaware Supreme Court has approved huge hourly rates before.In 2012, the court affirmed the largest fee in its history, around $304mn to attorneys who obtained a $2bn judgment for Southern Copper Corp The fee worked out to about $35,000 an hour.By comparison, the highest-paid corporate attorneys, who bill by the hour and get paid regardless of outcome, can make around $2,500 an hour.The Delaware Supreme Court did not specify when fees become windfalls, but did say $5,000 an hour was “at the high end.” That would suggest Tesla is on the hook for a fee of around $100mn, just 10% of the requested cash fee. Lipton noted there are several factors that suggest the Tornetta attorneys should expect more.For example, they worked unpaid for six years, overcame challenging legal hurdles, risked taking the case to trial and won a complete victory.However, if McCormick decides that Musk’s pay package was restored by the shareholder vote, Tesla should not be on the hook for a large legal fee, John Reed, an attorney for the company, told McCormick at a July hearing.“You asked if Elon Musk was overpaid,” Reed said, referring to McCormick’s question at the start of her January ruling. “We want to ask if the plaintiff’s lawyers are being overpaid.” – Reuters

This year’s Jackson Hole Economic Symposium of central bankers from around the world is right to focus on the monetary-transmission mechanism, the channel through which monetary policy influences broader economic and financial conditions. Although the US Federal Reserve raised interest rates by 500 basis points between March 2022 and July 2023, it seems that little damage has been done to the US real economy or its financial system.This low cost of disinflation is shocking (though certainly welcome). Even if we have strong hypotheses to explain ex post why the United States has been able to combine growth with disinflation for the last two years – notably high immigration, a surge in productivity, and (above all) well-anchored inflation expectations – the lack of a visible direct impact from rate increases is remarkable.Evidently, current US monetary policy is meaningfully looser than many Federal Open Market Committee (FOMC) members and market participants think it is. What’s more, the impact of monetary policy on the economy is more conditional, and probably on average weaker, than commonly believed. This assessment is directly relevant to the FOMC’s upcoming monetary-policy choices, but even more so to policymaking further in the future.This past June, multiple FOMC members expressed concern that monetary conditions have been tightening further as declines in inflation lead to higher real interest rates. But this view fails to account for the magnitudes and channels of monetary transmission. Here, the focus on the policy instrument, the federal funds rate, is misleading. It is a mistake to assume that the settings of the instrument are close to optimal at any given time, or that they must be fine-tuned with each twist and turn in the inflation forecast. The assessment of monetary conditions should focus more on actual financial-market outcomes than on preconceived notions of the effect of policy.As we saw with the 2008 global financial crisis, financial markets are segmented, and central banks often must intervene directly in particular markets to have an impact. For example, commercial lending by non-bank financial intermediaries is affected differently by interest rates and (the lack of) supervision than is traditional bank lending. Private equity and unlisted investments react differently to policy adjustments than commercial paper, bonds, and even traded equities do. Even in the absence of financial-liquidity constraints, regulation and international barriers impede the transmission of credit flows uniformly across jurisdictions.Thus, as a forward indicator, financial conditions are at least as important as the slightly backward-looking signals sent by the labour market. Moreover, financial indicators remain quite accommodative. Equities have returned to high valuations, and the decline in longer-term Treasury rates has persisted. Interest-rate spreads (such as those between lower-rated corporate bonds and comparable duration Treasuries) have widened somewhat but remain very low by historical standards, let alone for the end of a Fed tightening cycle.The same holds true for delinquent auto and consumer loans and for real-estate losses. These have come off their lows, but not by much. It is rather odd to call monetary policy “tight” when credit remains easy and balance sheets are barely distressed.Another problem with focusing primarily on changes in the real federal funds rate (assuming all else is equal) is that it ignores a more important benchmark for the impact of monetary policy: where that interest rate is in relation to the neutral interest rate (r*), the rate where monetary policy is neither “loose” nor “tight” for an economy growing near trend. The gap between the underlying long-term return to safe capital in the economy and what the Fed sets as the minimum lending rate for very short-term loans thus reflects the traction of monetary policy on the economy. If the neutral rate has moved up a lot, any rise in real rates as inflation declines could be more than offset.As Fed Chair Jerome Powell rightly pointed out at previous Jackson Hole conferences, the economic stars (neutral interest and unemployment rates) are not directly observable, or even robustly estimated. Yet there are overwhelming reasons to believe that r* has risen substantially above its pre-Covid levels, which means that monetary-policy settings have actually become looser over time.Foremost, US federal deficits are much higher on a sustained basis, and spending on defense, environmental, and industrial policies will keep them up. These additional outlays will drive up rates on government borrowing, which is a key determinant of r*.At the same time, Chinese and American officials alike are discouraging capital flows from Chinese investors into US markets, shrinking the pool of savings available to finance US deficits – which also increases long-term rates. But after the pandemic, US savings rates fell as consumers bought in to a “YOLO” (you only live once) mindset and internalised the lesson that there will always be government support in times of crisis (thankfully). Again, this will make rates go up as debt levels rise.Finally, if the recent acceleration in productivity growth is sustained – perhaps because AI or green-tech becomes more widespread – that, too, will raise the real return on capital, and thus r*. However one weighs these various factors, all trends point to an increase in r* by as much as 1.5%.To be sure, the fact that US monetary policy is looser than many believe should not discourage the Fed from cutting rates in September and November. From a risk-management perspective, if inflation is forecast to continue on a downward trend and unemployment is rising, loosening policy to forestall a recessionary slide is prudent (at least until the economic impact of November’s US election becomes clear next year).But warnings that Fed policy is potentially dragging the economy down are unjustified. When the US economy proves resilient yet again, and the time for rate increases returns, the FOMC should be prepared not only to raise rates more than it is used to, but also to track how its hikes transmit across diverse financial markets. — Project Syndicate• Adam Posen is President of the Peterson Institute for International Economics.

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Today’s escalating climate crisis disproportionately affects the world’s two billion informal workers. As heat waves become increasingly frequent and intense, the absence of global occupational safety and health (OSH) protections against climate-related risks leaves these workers dangerously exposed. Forced to labour in record-breaking temperatures, their health and even lives are in jeopardy.In 2022, the International Labour Organisation (ILO) declared a “safe and healthy working environment” a fundamental right. But although many countries have recognised extreme heat as an occupational hazard and implemented workplace-safety protections, these measures rarely extend to the world’s most vulnerable workers: those working informally in fields, landfills, street markets, and homes.More than 2.4bn workers worldwide are exposed to extreme heat annually. With heat stress projected to increase rapidly over the next few decades, the international community must urgently reform labour-protection frameworks to ensure workers’ health, safety, and livelihoods. Without decisive action, millions will continue to suffer needlessly, trapped in a cycle of rising temperatures and hazardous working conditions.This danger is particularly acute in low- and middle-income countries, where informal jobs account for roughly 90% of total employment. While data on these workers’ health and safety are limited, a growing body of research suggests that extreme heat has a profoundly negative impact on their well-being and livelihoods.For example, research by Women in Informal Employment: Globalising and Organising (WIEGO) and the University of Sheffield found that 85% of waste pickers in Brazil experienced heat stress in 2022 and 2023, resulting in serious health risks and reduced productivity. In Delhi, where temperatures breached 50° Celsius in May, the death of a 53-year-old labourer prompted the lieutenant governor to issue new guidelines adjusting labourers’ working hours and expanding access to drinkable water. As a recent World Health Organisation editorial notes, the severe effects of extreme heat on informal workers include an increased risk of skin cancer.While discussions about protecting informal workers from heat stress often focus on outdoor labourers such as farmers and street vendors, extreme heat also affects those who work indoors in poorly ventilated spaces with limited access to potable water. In Brazil, a waste picker told WIEGO researchers that “the heat is sometimes unbearable. Being inside a shed, which has a zinc roof, affects everyone.” Finding sustainable cooling solutions is also important for domestic workers and caretakers, most of whom are women.But despite recent advances on establishing global OSH standards, policymakers face significant challenges in addressing the issue. Notably, 64% of informal workers are self-employed. Without employers to finance essential safety measures, economically vulnerable workers must use their limited resources to protect themselves. As Yuleina Carmona, WIEGO’s Mexico City co-ordinator, observed, “Those who work on the street buy their own water, carry their umbrellas, wear hats, and mitigate the effects of the heat with their own resources.”This weakness reflects a disconnect between local and national policymakers. In urban areas, informal workplaces are typically regulated by municipal authorities that rarely co-ordinate with national labour agencies responsible for workplace safety. Moreover, informal workers are often stigmatised and seen as an undesirable source of crime and urban blight. Even when national and local authorities manage to co-ordinate their efforts, significant gaps remain. India’s heat action plans, for example, aim to tackle climate-related risks across multiple levels of government. But these plans overlook the realities of informal work and the need for targeted interventions at the municipal level, particularly in densely populated urban areas.While establishing global norms and standards is necessary, they must be translated into concrete measures that protect informal workers in the regions most affected by rising temperatures. In particular, local and municipal authorities must adopt inclusive labour regulations and invest heavily in appropriate infrastructure, including expanded access to potable water, shade, indoor ventilation, and high-quality occupational health services. To prevent the rise in morbidity and mortality rates associated with heat stress, these services must be affordable, adequately funded, and accompanied by structural shifts at the national level to provide vital income support to workers grappling with climate-related displacement.In addition to such worker-driven solutions, OSH protections must be integrated into climate policies. As heat-related hazards continue to evolve and intensify, a staggering number of workers – including those in informal employment – face the risk of chronic illness, death, and disability. Without co-ordinated action, the future of work will be increasingly dangerous and uncertain, leaving millions of workers to face the brunt of the climate crisis. — Project Syndicate

Nasa’s decision to send Boeing’s Starliner capsule home without astronauts follows years of missteps by the planemaker in its space business and raises doubts over the future of the unit, analysts and industry sources said.Taking Nasa astronauts Butch Wilmore and Suni Williams to the International Space Station (ISS) was to have been a turning point for Starliner after years of delays, technical glitches and supply chain mishaps. Starliner has cost Boeing $1.6bn in overruns since 2016, according to a Reuters analysis of securities filings.The astronauts were to stay at the ISS for about eight days, but problems with Starliner have extended that to eight months.Starliner’s propulsion system malfunctioned and Nasa deemed the troublesome thrusters unsafe for the return journey. So Wilmore and Williams will be brought home in a SpaceX Crew Dragon capsule next year, the latest humiliation for Boeing at the hands of Elon Musk’s dominant space company.The mission was meant to be a final test before Nasa could certify Starliner for routine flights. Boeing’s new CEO Kelly Ortberg now must decide whether to keep pouring money into Starliner, which analysts doubt will ever be profitable, or to unravel the capsule business and focus on rebuilding the tarnished reputation of its core planemaking division.Elsewhere in its space business, US government watchdogs have repeatedly reported Boeing is years behind schedule and several billions of dollars over budget as main contractor on Nasa’s giant Space Launch System (SLS) rocket, a centrepiece vehicle of America’s moon programme.And the aerospace giant is already trying to sell a separate rocket launching firm it jointly owns with Lockheed Martin, Reuters reported last month.Nasa administrator Bill Nelson said he spoke to Ortberg on Saturday and left that conversation 100% sure Starliner would fly astronauts again. But that is no guarantee of a long-term commitment if Starliner’s troubles persist.Asked whether Boeing would stay in the programme after Starliner’s current mission, a Boeing spokeswoman declined to comment, telling Reuters the company is focusing on getting the spacecraft back safely.“I am not sure the decision will ultimately be Nasa’s. Boeing is going to have to foot much of this bill, as they have been,” said Lori Garver, former Nasa deputy administrator who was a key architect of Nasa’s Commercial Crew Program.Ortberg, who started as CEO this month, is busy trying to convince Boeing workers, investors, airline customers and the flying public that safety issues are under control after a panel dramatically flew off a 737 MAX jet in midair in January.Analysts said Boeing will probably keep Starliner alive, partially because Boeing has experienced worse in other programmes in its defence business. In the future, Starliner could serve customers other than Nasa, such as private space stations meant to replace the ISS after 2030, but those efforts could change.Nasa sees Boeing as a crucial backup to Musk’s SpaceX, the only entity capable of putting humans in orbit other than US rivals Russia and China.Boeing has spent more than half of its $4.5bn Nasa contract awarded in 2014 and Starliner has yet to be certified. The contract, which has swelled by $300mn despite its fixed-price structure, includes six post-certification Starliner missions that will fall farther behind schedule with each mishap.SpaceX’s Crew Dragon was certified in 2020 and has flown 10 crewed missions for Nasa since signing a contract initially worth $2.6bn. Nasa has bought more Crew Dragon missions to make up for Boeing’s delays, boosting SpaceX’s contract to $4.9bn.Boeing may have to re-do the astronaut mission to the ISS in order to get the space capsule certified by Nasa. The company already had to repeat an uncrewed 2022 mission at a cost of nearly $500mn.“I wouldn’t rule anything out. We have options for how we move forward,” Nasa’s space operations chief Ken Bowersox, a former astronaut, told reporters on Saturday when asked if Starliner can be certified without a do-over. He did not specify the options.It has been five years since the Starliner’s first uncrewed test failed because of several critical software glitches. Since then, SpaceX has outpaced Boeing in rocket launches, crewed space flight and satellite manufacturing.Nasa’s inspector general has estimated Crew Dragon’s mission price as around $55mn per seat, while Starliner’s is around $90mn.For years, Boeing’s space unit has suffered an exodus of skilled staff; many have joined SpaceX and Jeff Bezos’ Blue Origin. Boeing’s clunky supply chain makes designing spacecraft more complicated than for Musk’s more nimble, largely vertically integrated operation, according to 10 people who have worked with Boeing’s space unit.Boeing, in a statement to Reuters, said the company is proud of its Starliner workforce and noted that it has acknowledged the workforce and supply chain challenges on earnings calls.Throughout Starliner’s development, the hardware and sometimes the software of the propulsion system have been persistent issues. New problems were found just hours before the spacecraft made an initial attempt to launch this summer. Helium, used to pressurise the propellant, was leaking through a small seal in a flange.Nasa saw the leak as low-risk and allowed Starliner to launch. Yet officials said the propulsion system had a “design vulnerability” Boeing must address before its next mission.The Space Launch System (SLS) rocket is another problem for Boeing’s space unit. An August report by Nasa’s inspector general cited deep issues with quality control, while saying Boeing’s SLS workforce in Michoud, Louisiana “lacks sufficient aerospace production experience, training, and instruction.”A Boeing spokeswoman said the company disagrees with many of the report’s “assertions, including any suggestion that our Michoud workforce is unqualified.”Unlike Starliner, Nasa foots the bill for delays and development problems with SLS. The extent of cost overruns are unclear because Nasa does not accurately track them, inspector general reports have repeatedly said.Nasa is trying to hand ownership of SLS to Boeing and co-contractor Northrop Grumman to bring the costs down, but that appears unlikely.“Boeing’s other businesses aren’t terribly vulnerable to disruption. But space? That’s another story,” said Richard Aboulafia, an aerospace analyst.Aboulafia believes Ortberg will crunch the numbers and negotiate with Nasa to make Starliner viable, although he is not convinced that is the right step.“If I were an adviser to Kelly Ortberg, which I’m not, I’d say... for space, well boss, you might want to consider selling it,” said Aboulafia. — Reuters

Mention “proliferation” and most people will assume that you are talking about the spread of nuclear weapons. For good reason. Nine countries (China, France, Pakistan, India, Israel, North Korea, Russia, the United States, and the United Kingdom) possess them. But many more have the ability and conceivably the motive to produce them. There is also the danger that terrorist groups could obtain one or more of these weapons, enabling them to inflict horrific damage.This sort of proliferation is often described as “horizontal.” The biggest immediate focus remains Iran, which has dramatically reduced the time it would require to develop one or more nuclear devices. An Iran with nuclear weapons might use them – or, even if not, might calculate that it could safely coerce or attack Israel or one or more of its Arab neighbours directly (or thorough one of its proxies) with non-nuclear, conventional weapons.A nuclear-armed Iran would likely trigger a regional arms race. Several of its neighbours – particularly Saudi Arabia, Egypt, the United Arab Emirates, and Turkiye – might well develop or acquire nuclear weapons of their own. Such a dynamic would further destabilise the world’s most troubled and volatile region.But as important as this scenario is, another type of proliferation now merits attention: vertical proliferation, namely, increases in the quality and/or quantity of the nuclear arsenals of the nine countries that already possess these weapons. The danger is not only that nuclear weapons might be used in a war but also that the possibility of war would increase by emboldening governments – like Iran in the scenario above – to act more aggressively in pursuit of their geopolitical goals in the belief that they may act with impunity.The fastest-growing nuclear arsenal in the world today belongs to China. It would appear that China believes that if it can match the US in this realm, it can deter the US from intervening on Taiwan’s behalf during any crisis over the island. China is on pace to catch up to the US and Russia in a decade – and is showing no interest either in participating in arms-control talks that would slow down its buildup or placing a ceiling on its capabilities.Then, there is North Korea. Neither economic sanctions nor diplomacy has succeeded in curtailing its nuclear programme. North Korea is now thought to possess more than 50 warheads. Some are on missiles with intercontinental range and improving accuracy. Both China and Russia have assisted it, and further Russian assistance is likely given North Korea’s provision of weapons to Russia for use in Ukraine.Again, the question is not only what North Korea might do with its nuclear arsenal. It is not farfetched to imagine a North Korean attack on South Korea or even Japan using conventional forces, coupled with a nuclear-backed threat to the US not to intervene. It is precisely this possibility that is fuelling public pressure in South Korea to develop nuclear weapons, demonstrating that vertical proliferation can trigger horizontal proliferation, especially if countries currently protected by the US come to doubt America’s willingness to put itself at risk to defend them.Russia offers another reason for worry. Russia and the US have the world’s two largest nuclear arsenals. Both are constrained by arms-control agreements (the New START Treaty) that limits the number of nuclear warheads that each can deploy to 1,550. (Additional warheads may be kept in storage, though.)The agreement also limits how many launchers (planes, missiles, and submarines) carrying nuclear weapons can be fielded. And the pact also includes various arrangements to facilitate verification so that the two governments can be confident that the other is complying.New START (ratified in 2011 and extended several times since) is due to expire in February 2026. Russia might well refuse to extend the treaty again, possibly because the performance of its armed forces in Ukraine has left it more dependent than ever on its nuclear arsenal. Or it may seek to barter its willingness to continue abiding by the agreement for US concessions on Ukraine.What worries Washington is not only what Russia might do but also that the US now faces three adversaries with nuclear weapons who could co-ordinate their policies and pose a unified nuclear front in a crisis. All this is prompting the US to rethink its own nuclear posture.In March, the US government reportedly completed its periodic review of its nuclear forces. At a minimum, billions of dollars will be spent on a new generation of bombers, missiles, and submarines. At worst, we could be entering an era of unstructured nuclear competition.It all adds up to a dangerous moment. The taboo associated with nuclear weapons has grown weaker with time; few were alive when the US used nuclear weapons twice against Japan to hasten World War II’s end. Indeed, Russian officials have hinted strongly at their readiness to use nuclear weapons in the context of the war in Ukraine.Nuclear weapons played a stabilising role during the Cold War. Arguably, their existence helped keep it cold. But there were only two decision-makers, and each had an inventory that could survive a first strike by the other, enabling it to retaliate in kind, thereby strengthening deterrence. And both sides mostly acted with a degree of caution, lest their competition escalate to direct conflict and precipitate a disastrous nuclear exchange.Three and a half decades after the Cold War’s end, a new world is emerging, one characterised by nuclear arms races, potential new entrants into an ever less exclusive nuclear-weapons club, and a long list of deep disagreements over political arrangements in the Middle East, Europe, and Asia. This is not a situation that lends itself to a solution, but at best to effective management. One can only hope the leaders of this era will be up to the challenge. — Project SyndicateRichard Haass, President Emeritus of the Council on Foreign Relations, is a senior counsellor at Centerview Partners and the author of The Bill of Obligations: The Ten Habits of Good Citizens and the weekly newsletter Home & Away.

Climate-policy debates tend to focus on reducing greenhouse-gas emissions. This makes sense, given that GHGs are the primary cause of climate change. But global warming is expected to continue even under the most optimistic scenarios, implying an urgent need for comprehensive strategies to minimise the economic costs, public-safety risks, and health threats associated with the escalating climate crisis.While some experts argue that full adaptation is impossible, owing to the significant risks posed by global warming, this view is misleading. Admittedly, adaptation alone cannot offset the worst effects of climate change, and current efforts to reduce global GHG emissions must be ramped up. But overlooking the need to develop, implement, and invest in strategies aimed at protecting businesses, households, and communities from the inevitable consequences of a warming planet would be profoundly irresponsible. Flood protection is a prime example. As inundations become more frequent and severe, restoring floodplains and other proactive measures have become increasingly important. Long-term adaptation should also play a central role in post-disaster reconstruction projects. Instead of repeatedly repairing damaged houses, for example, it might be more prudent to rebuild them in less flood-prone areas.Adaptation efforts are only as effective as the mechanisms to finance them. While many taxpayers understandably support funding reconstruction efforts, doing so can create incentives for construction in vulnerable areas. Instead, these funds would be better spent on measures that protect communities against future flooding, not just building new houses in safer areas, but also investing in targeted research and innovation aimed at helping sectors affected by climate change, particularly agriculture, adapt to the threat.Increasingly dangerous heat waves also underscore the urgent need for adaptation measures. Although record-breaking temperatures pose significant health risks, particularly for the elderly, pregnant women, and people with pre-existing conditions, countries like Germany are still reluctant to invest in air conditioning systems and other cooling methods. But such systems do not require fossil fuels; they can be powered by solar energy, which is abundant during hot periods.Extreme heat is especially risky for outdoor workers, highlighting the need to update occupational health and safety laws. Companies must be required to have measures in place to protect their employees, such as providing shaded areas and access to drinking water. Given that low-income earners often work in high-risk conditions, climate adaptation offers far-reaching social benefits. The ability to implement such measures is, however, largely restricted to households, municipalities, regions, and countries with sufficient financial resources and technical expertise. Without adequate adaptation strategies and financing mechanisms, impoverished individuals and communities will disproportionately bear the brunt of climate change, further deepening economic and social disparities both locally and globally.In principle, households and companies should approach adaptation like any other investment decision. Instead of pursuing every option, they should focus on those that offer the greatest value, similar to how an entrepreneur would evaluate various expenditures.To be sure, adaptation efforts face numerous obstacles, including uncertainty about the future trajectory of climate change and the high costs associated with modifying existing structures and processes. Moreover, the scarcity of information on effective adaptation measures and how they could be implemented within current legal frameworks could drive up costs. All of this could depress investment in adaptation, especially since the benefits may be realised only in the medium to long term.Nevertheless, both governments and the private sector must make climate adaptation a top priority. By anticipating risks and taking proactive steps to adjust their operations, companies could reduce implementation costs. Meanwhile, policymakers must invest heavily in building resilient infrastructure, supporting research and innovation, and disseminating vital information to households, businesses, and local authorities to help them prepare for various climate-related challenges, including floods, heat waves, and other extreme weather events.Adaptation is not just a practical necessity; it is a moral imperative. While reducing GHG emissions is necessary, adaptation is equally important to ensuring that the world’s most vulnerable populations do not bear the brunt of the most devastating effects of climate change. By placing adaptation measures at the heart of climate policies, alongside mitigation, we can create a future that is both resilient and equitable.

On August 14, Japanese Prime Minister Fumio Kishida announced that he would step down as leader of the ruling Liberal Democratic Party (LDP) in September. Soon after, the LDP will select Kishida’s replacement – who will serve as prime minister, given the LDP-led coalition’s control of the Diet (the lower house of parliament).The new government is then likely to call a snap election, in the hopes that the “honeymoon effect” will help it increase its majority. What the LDP must figure out now is which of its members has the standing with the public and within the party to lead the way to victory.It is worth considering, first, why Kishida is stepping down. While the media greeted the decision as a surprise, it is hardly incomprehensible. Much like US President Joe Biden, who withdrew from the US presidential race last month, Kishida has a very low approval rating, running below 30% since last November, owing not least to a political-funding scandal.It was in November that the news broke that major LDP factions had not been properly reporting the funds they received from the sale of tickets to fundraising parties. LDP members who sold more tickets than their allocated quota were given the surplus as kickbacks. Such kickbacks were particularly widespread in the LDP’s Abe faction. (The late prime minister Abe Shinzo did not allow the practice while he was in office, but it was later revived.) Many powerful politicians were disgraced.To his credit, Kishida was not involved in the scandal. Moreover, he responded admirably, calling for the dissolution of the LDP’s factions and dissolving his own first. Others followed, with the notable exception of the Aso faction, led by former prime minister Aso Taro. Still, as the LDP’s approval rating plummeted, so did Kishida’s.Japanese prime ministers with approval ratings below 30% have always either stepped down from party leadership or ended up leading their parties to electoral defeat. Kishida probably did not want to risk such a disgrace, especially since, like Biden, he has already racked up a number of achievements of which he can be proud.Kishida did not hesitate to join Japan’s Western allies in heavily sanctioning Russia after its full-scale invasion of Ukraine in 2022. Moreover, at a time of rising regional security threats (especially from China) and deepening uncertainty about America’s willingness to protect Japan in the long term (particularly if Donald Trump wins November’s US presidential election), Kishida took steps to ensure that Japan can take responsibility for its own security. In 2022, Japan’s government announced plans to double defence spending in five years and acquire the ability to strike enemy bases.On the economic front, Kishida introduced a plan to expand subsidies and lump-sum tax rebates to help families with children. More broadly, he helped to lift Japan’s economy out of the doldrums. Under his leadership, zero inflation and declining real wages gave way to 2% inflation and positive real-wage growth.To be sure, this process started with Abe, whose economic-policy strategy, known as “Abenomics”, broke deflation. But not even ultra-loose monetary policy, overseen by former Bank of Japan Governor Haruhiko Kuroda, could get inflation running sustainably at the 2% target.Achieving that required a few shocks: in 2022-23, a combination of supply-chain disruptions, an energy-price surge, and the yen’s depreciation pushed inflation to 4%, breaking persistently low inflation expectations. But it also required leadership: Kishida worked hard to persuade companies to offer major wage increases in the 2024 “spring offensive” (pay-rise season). The average pay rise, at over 5%, was the largest since 1991.Beyond his political and economic accomplishments, Kishida has already outlasted other LDP prime ministers who, like him, belonged to the party’s liberal faction, known as Kochikai. Masayoshi Ohira and Kiichi Miyazawa were each in office for under three years. Given his apparent respect for these prime ministers – for example, Kishida’s Vision for a Digital Garden City Nation has roots in Õhira’s “national garden city initiative” – Kishida is likely proud to have remained in office longer.Japanese media suggest that 11 LDP members are preparing to vie for Kishida’s position, but a few stand out. Takayuki Kobayashi, who announced his candidacy just a few days after Kishida announced that he would not run for re-election, is a conservative former finance-ministry bureaucrat, meaning that he would likely place a high priority on fiscal discipline. At just 49 years of age, he might appeal to an LDP that is eager to escape the shadow of the fundraising scandal and the power politics that characterised the old faction structure.Another young candidate is 43-year-old Shinjiro Koizumi, who served as the environment minister in the Abe and Suga cabinets. The son of former prime minister Junichiro Koizumi – who enjoyed a high approval rating for his colourful language and success in following through on his promises (most notably, the privatisation of the *Japan Post) – he is well-known and popular among the general public, who expect him to emphasize education and family-oriented policies. A recent survey by Nikkei puts Koizumi in the front of the pack.Other candidates are considerably older. Former foreign minister Kono Taro, 61, could be expected to pursue important structural reforms, though he will have to clinch Aso’s support if he is to have a chance. The 67-year-old Shigeru Ishiba, a conservative defence expert, surprised no one when he announced his candidacy, as he has run four times before. (In 2012, he won the first round, but lost to Abe in the second.) Two more candidates – Foreign Minister Yoko Kamikawa, 71, and Yoshimasa Hayashi, 63 – are members of Kishida’s now-dissolved faction.Now that he has stepped down, Kishida might be able to act as a kind of kingmaker in the LDP. In any case, several contenders will be vying for his support.— Project Syndicate• Takatoshi Ito, a former Japanese deputy vice-minister of finance, is a professor at the School of International and Public Affairs at Columbia University and a senior professor at the National Graduate Institute for Policy Studies in Tokyo.

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The global economic shocks of the past few years have left Europe particularly vulnerable. While virtually everyone has suffered from climate- and pandemic-related disruptions, the European Union has also had the Ukraine war unfolding on its doorstep, and its acute dependence on energy imports has meant that rising prices – and the need to shift away from Russian fossil fuels – have bitten especially hard. Both growth and economic security are under pressure.To be sure, some of these were short-term shocks. The pandemic-related disruptions have largely resolved themselves, and even inflation, which surged in the pandemic’s aftermath, seems to be largely under control, thanks to the efforts of EU central banks, not least the European Central Bank, and the issue appears likely to be fully resolved within the next 12 months.But the EU faces a number of formidable economic challenges that will not simply go away. For starters, rising security risks in its neighbourhood, combined with growing doubts about the durability of America’s commitment to European defence, have put pressure on the EU to strengthen its own capabilities. This implies not only more coordination across countries, but also a significant increase in overall defence expenditure: the bloc’s total spending currently amounts to 1.3% of GDP, well below Nato’s 2%-of-GDP target.Moreover, productivity growth, which has been flagging in much of the world, is especially low in Europe, and the gap between the EU and the United States is widening each year. With the unemployment rate averaging some 6.5%, there is a bit of room for increased aggregate demand to fuel growth, but robust long-term growth will be virtually impossible if Europe cannot address lagging productivity.This will be no easy feat. Long-term productivity growth in the developed economies depends significantly on structural change, driven mainly by technological innovation. This is where Europe’s principal problem lies: in a range of areas, from artificial intelligence to semiconductors to quantum computing, the US and even China are leaving Europe in the dust.The main reasons for the EU’s innovation deficit are well known. Both basic and applied research and development have suffered from chronic underinvestment. The effectiveness of funding for basic research is undermined by a decentralised approach, with uncoordinated and poorly targeted national programs taking precedence over EU-level finance and administration. In addition, the integration of the single market remains incomplete, particularly in services. This is especially important in digital fields, where returns on investment in innovation depend on market size.The EU faces other barriers to becoming an innovation hub. One is a lack of the necessary infrastructure, especially the massive amounts of computing power required to train AI models. (At present, the EU relies largely on American tech giants for such capabilities.) Another is that the venture capital and private equity needed to support innovation – investors with the experience and motivation to help young entrepreneurs build innovative enterprises – is not widely available, though there are promising entrepreneurial ecosystems in a number of countries.But these barriers can be surmounted. And if they are, the EU has important strengths on which it can capitalise, beginning with abundant talent coming from first-class universities. In addition, Europe’s well-developed social services and social-security systems deliver a level of economic security that can facilitate entrepreneurial risk-taking.Unless the EU can capitalise on the technological drivers of structural change, however, parts of its economy will remain dominated by traditional industrial sectors that have proven slow to adopt productivity-enhancing innovations. In a global economy where value is increasingly derived from intangible sources, the EU will continue to depend on tangible assets to create value. And Europe’s deep pool of human capital will grow shallower, as its top talent migrates to where opportunities are more abundant.Europe must decide: it can remain on its current course, which is sure to lead to relative stagnation, or it can chart an entirely new path. The latter approach is riskier, but it also holds far more upside potential. There is no shortage of people in government, business, policy, and academia who understand the challenges Europe faces and are more than capable of devising, debating, modifying, and implementing a creative forward-looking plan.Unfortunately, such a plan does not appear to be a high priority within European countries or at the EU level. It does not feature in the political debates that surround national elections. Perhaps what is missing is a clear picture of the likely consequences of maintaining the status quo, and, more important, a compelling vision that can inspire and guide policy and investment.When a journey is challenging, a clear view of the destination is vital to keep people motivated. Technocrats often fail to recognise this, but Europe itself has experienced it firsthand in its quest to adopt sustainable growth patterns and economic models, where there is a clear vision of the destination. Likewise, leaders in successful developing countries typically promote a clear picture of their desired future, in order to encourage and enable the difficult choices that are needed to build it.There is no reason to think that the EU is incapable of devising a new vision for its future and a roadmap for the digital and structural transformation it so badly needs. But first, Europeans must answer a simple but critical question: What should the EU look like – in terms of innovation, the economy, security, and resilience – in a decade? — Project SyndicateMichael Spence, a Nobel laureate in economics, is Emeritus Professor of Economics and a former dean of the Graduate School of Business at Stanford University and a co-author (with Mohamed A El-Erian, Gordon Brown, and Reid Lidow) of Permacrisis: A Plan to Fix a Fractured World.

Standing opposite a mansion in the elegant English city of Bath, Tegan Shirdon marvelled at the window from where Penelope, one of the heroines of Bridgerton, would eye her love interest Colin in the hit show.A “huge fan” of the Netflix series which has racked up 300mn views, the 20-year-old Australian student was one of around 30 tourists to descend on the southwestern city recently.They had come from countries including The Netherlands, Canada, Spain and Japan to admire the setting for the early 19th century romance drama.Film student Ruby Maidment, their guide for the day, dished out historical anecdotes alongside snippets about Bridgerton shoots.She pointed to a Marks & Spencer’s supermarket sign that made it on-screen after production editors missed it, while noting the handsome fees paid to locals to stay indoors during filming.“A lot of people when thinking about where to go for holidays, they’ll put their favourite show on and go ‘Oh, actually, why don’t we check out there?’,” she told AFP.This trend has a name: so-called set-jetting. It has emerged in recent years with the rise of streaming platforms, and has boomed further since the Coronavirus pandemic.Movies and television series have become the leading source of travel inspiration, ahead of social networks, according to online travel group Expedia.It found that 39 percent of tourists surveyed reported they had chosen a destination after seeing it featured on screen.Set-jetting is “becoming a significant driver and motivator for travel,” said Robin Johnson of the VisitBritain tourism authority.“I think particularly for younger audiences — Gen Z, millennials — who are growing up on streaming,” he added.“It really makes sense for us Britain to capitalise on (it), because there is no bigger or better platform to promote a destination than high-end film or TV series. Money can’t buy that sort of exposure.”Seven out of 10 international tourists have visited at least one film and TV location during their stay in the UK in the last 10 years, according to VisitBritain. Over 90% of potential visitors would be eager to do so in the future, it noted.“There is not really much film back home where I am, so if I want to see any set of a TV show I need to come on a 17-hour flight on the other side of the world,” said Shirdon, a journalism student.Enduring franchises such as James Bond and Harry Potter continue to attract millions of visitors. But more recent productions, such as Game of Thrones in Northern Ireland, Outlander in Scotland, and more recently The Crown as well as Bridgerton in England, are sustaining the momentum.To further boost this “powerful pull”, VisitBritain and the British Film Commission, the industry’s support agency, plan to launch a joint promotional campaign next year. Called “Starring GREAT Britain”, it is aimed at attracting more travellers as well as new productions.The campaign will place filming locations and associated visitor experiences “centre-stage, telling the story of Britain’s regional diversity to drive visits and spend across the regions”, according to the agencies.“When you look at what has happened in the UK over the last 10 years, the UK is now perceived as one of the biggest places in the world to make film and television,” Adrian Wootton, head of the British Film Commission, told AFP.He noted the country had netted £3.1bn ($4.1bn) of foreign investment as a result.The key to this success? A combination of breathtaking scenery, English-speaking talent, big investment in studios and other filmmaking hubs, as well as generous tax reliefs, he argued.“Places like Northern Ireland have been transformed by a series... nobody would have considered it a tourist destination,” before *Game of Thrones and its recent prequel *House of the Dragon, Wootton added.By the end of 2023, Bridgerton had already generated £5mn for the local economy thanks to domestic and international visitors — and that was before a popular third season aired this year.“There’s definitely so much history in the UK that you don’t get as much in Canada, so we love to visit and learn all about the history,” Canadian transplant to the UK Emily Maniquet told AFP during a visit to Bath.“I love British television,” she added, noting she had already visited Harry Potter filming locations during a trip to Edinburgh.

When confronting the choice between truth and power, Shakespeare’s Hamlet poses his famous existential question: “To be or not to be?” The search for an answer will confront heroes and villains alike with the prospect of death or despair.Like Shakespeare’s tragedy, battles over the infrastructure that everyone uses to search the Internet are also steeped in intrigue and abuse of power. The villain is Google, which is not only a search engine, a company, and a brand, but also a verb. “To search is to Google,” noted a witness in the recent antitrust case brought by the US government and 38 state attorneys general against Google.On August 5, a federal judge handed down a verdict of “liable.” Google was found to have engaged in unlawful conduct as a monopoly in two markets, including – most critically – the one for general-search services. The remedies have yet to be announced, but commentators are already speculating that the case will reshape Internet search.The finding that Google dominates Internet search hardly came as a surprise. Most people start queries for information or products by plugging their terms into Google’s general search engine (GSE). They understand that when they use Google on their computers, phones, or tablets, they are “googling.” But many users fail to appreciate that they are also googling when they use Apple’s Safari or Mozilla’s Firefox browser, because these companies have made Google’s GSE the default search engine – albeit garnished with some privacy screens.For its part, Google argued that its dominance is the result of superior products and services. It likened the web to an “ever-growing library with billions of books and no central filing system.” These treasures can be accessed only with a GSE that crawls the Internet, indexes sites, ranks them, and presents the results to users almost instantly.The critical input for GSEs comes from the users: the topics they search, the terms they use, the links they click, the products they buy, and so forth. Scale is key to the success of the service. More information about user behaviour enables better search results, better results bring more searches, and more searches bring in more revenue as advertisers flock to Google to boost their sales by “funnelling” products to end users.Few dispute that Google’s GSE is the first among equals, with Microsoft’s Bing representing the only plausible alternative. It rivals Google’s GSE in quality and speed when accessed on a desktop, but not on mobile devices. The numbers presented in the trial are telling. As of 2021, over 89% of queries flowed through Google, and only 6% through Bing. This translates into $146bn in ad revenue for the former, and less than $12bn for the latter.A company that achieves a monopoly by dint of offering better products or services has not broken any law. But the situation changes when it wilfully acquires or maintains monopoly power, and, according to the court, the evidence established that Google crossed this line.Google realised early on that commanding information at scale would lead to market domination and monopoly profits. Unlike Microsoft – which tried to gain dominance in the 1990s by bundling a browser with its operating system, only to be stopped by antitrust enforcers – Google used carrots rather than sticks to deal with potential competitors.Its relationship with Apple is a case in point. Back in 2002, it offered Apple a deal that was hard to refuse: make Google’s GSE the default on Safari and get a cash reward. What started with a flat $10mn fee plus 50% revenue sharing evolved, by 2022, into an estimated $20bn annual payment to Apple. Along the way, the terms of the contract tightened as Google demanded exclusivity for its GSE, turned down requests to give Apple more flexibility, and made it impossible for Apple to terminate the contract unilaterally.Just as Hamlet’s mother had some good reasons to marry her husband’s killer, Apple’s deal with Google made sense, owing to the high up-front costs of launching a new GSE and maintaining and managing the ad business. Even switching to another GSE has become economically impossible. As one top manager at Apple put it, there was “no price that Microsoft could ever offer to Apple” to make the switch to Bing. Google, of course, understood this. In a 2020 internal study, it found that losing its exclusive status on Safari would cost the company between $28.2bn and $32.7bn in revenue.Moreover, Google maintains similar relations with Mozilla and DuckDuckGo, and it has entered revenue-sharing arrangements with all the leading cell carriers in the US: Verizon, AT&T, and T-Mobile. The carriers get Google’s Android technology but must pre-install 11 Google applications on the phones they sell. Six of these cannot be deleted by the end users.All told, Google pays more than $26bn annually to other tech companies to ensure that its GSE remains effectively the only game in town. It is the spider overseeing all the threads of a sprawling web of contracts.But we shouldn’t pity these other companies. The real victims are Internet users. The more Google expands its grip over the Internet, the less incentive it has to innovate, much less to care about end-users rather than advertisers. The Internet library is not a public repository, but rather a private, profit-seeking enterprise that pays off handsomely for companies in Google’s orbit. Internet users may believe that they are able to search for facts and truths like no previous generation could, but they have no voice in this game and can only take what they get or leave it.It took a lawsuit launched by the US Department of Justice to challenge Google’s monopoly, and we have yet to hear what might replace it. One hopes for a better ending than the one Shakespeare gives Hamlet, whose last words are: “The rest is silence.” — Project SyndicateKatharina Pistor, Professor of Comparative Law at Columbia Law School, is the author of The Code of Capital: How the Law Creates Wealth and Inequality.