Quote of the Month
"The lights begin to twinkle from the rocks: The long day wanes: the slow moon climbs: the deep Moans round with many voices. Come, my friends, 'T is not too late to seek a newer world. Push off, and sitting well in order smite The sounding furrows; for my purpose holds To sail beyond the sunset, and the baths Of all the western stars, until I die." - Alfred Lord Tennyson, Ulysses, 54-61
What I’m Reading:
1. How Biden’s clean energy industrial policy allows the private sector to take over public works
Why you should read it: In the New York Times, Uppsala University professor Brett Christophers argues that President Biden’s signature investment in clean energy, the Inflation Reduction Act, effectively turns a key component of America’s public infrastructure over to the private sector.
“The Inflation Reduction Act will reshape the physical and economic landscape of the United States over the next decade, including in ways that might surprise a lot of people… The I.R.A. will help accelerate the growing private ownership of U.S. infrastructure and, in particular, its concentration among a handful of global asset managers like Brookfield. This is taking the United States into risky territory. The consequences for the public at large, whose well-being depends on the quality and cost of a host of infrastructure-based services, from energy to transportation, are unlikely to be positive.”
“A common belief about both the I.R.A. and 2021’s Infrastructure Investment and Jobs Act, President Biden’s other key legislation for infrastructure investment, is that they represent a renewal of President Franklin Roosevelt’s New Deal infrastructure programs of the 1930s. This is wrong. The signature feature of the New Deal was public ownership: Even as private firms carried out many of the tens of thousands of construction projects, almost all of the new infrastructure was funded and owned publicly. These were public works. Public ownership of major infrastructure has been an American mainstay ever since… So it would be truer to say that in political-economic terms, Mr. Biden, far from assuming Roosevelt’s mantle, has actually been dismantling the Rooseveltian legacy. The upshot will be a wholesale transformation of the national landscape of infrastructure ownership and associated service delivery.”
Why it matters: “The story of asset-manager-led infrastructure investment is overwhelmingly a negative one. Asset managers are focused on optimizing returns on the assets they control by maximizing the income they generate while minimizing operating and capital costs. Many users of infrastructure that has come under asset manager ownership have suffered, as service rates have risen quickly and service quality has deteriorated…The Biden administration has taken a step freighted with peril by hitching the future of U.S. infrastructure provision to the private sector in general — and (by implication, if not intent) to asset management firms in particular. Brookfield and its peers will be undoubted beneficiaries. It seems unlikely that the American people also will.”
2. China’s foreign debt time bomb hits midnight
Why you should read it: Bernard Condon of the Associated Press details how China’s refusal to ease up on collection of its loans has thrown a dozen poor nations into economic chaos.
“An Associated Press analysis of a dozen countries most indebted to China — including Pakistan, Kenya, Zambia, Laos and Mongolia — found paying back that debt is consuming an ever-greater amount of the tax revenue needed to keep schools open, provide electricity and pay for food and fuel. And it’s draining foreign currency reserves these countries use to pay interest on those loans, leaving some with just months before that money is gone… Countries in AP’s analysis had as much as 50% of their foreign loans from China and most were devoting more than a third of government revenue to paying off foreign debt. Two of them, Zambia and Sri Lanka, have already gone into default, unable to make even interest payments on loans financing the construction of ports, mines and power plants.”
“China’s unwillingness to take big losses on the hundreds of billions of dollars it is owed, as the International Monetary Fund and World Bank have urged, has left many countries on a treadmill of paying back interest, which stifles the economic growth that would help them pay off the debt… In high-level talks in Washington last month, China was considering dropping its demand that the IMF and World Bank forgive loans if the two lenders would make commitments to offer grants and other help to troubled countries, according to various news reports. But in the weeks since there has been no announcement and both lenders have expressed frustration with Beijing… ‘My view is that we have to drag them — maybe that’s an impolite word — we need to walk together,” IMF Managing Director Kristalina Georgieva said earlier this month. “Because if we don’t, there will be catastrophe for many, many countries.’”
Why it matters: “Some poor countries struggling to repay China now find themselves stuck in a kind of loan limbo: China won’t budge in taking losses, and the IMF won’t offer low-interest loans if the money is just going to pay interest on Chinese debt.”
3. More companies taking advantage of IRA tax breaks than predicted
Why you should read it: More companies are taking advantage of the clean energy manufacturing tax breaks included in the Inflation Reduction Act than budget analysts predicted, Jim Tankersley and Brad Plumer write for the New York Times, driving up the overall cost of the legislation in the process.
“President Biden’s signature climate law appears to be encouraging more investment in American manufacturing than initially expected, powering what’s expected to be a surge in new factory jobs and domestic clean energy technologies, according to independent forecasters… When Democrats passed the Inflation Reduction Act last August, the Congressional Budget Office estimated that the law’s climate and clean energy tax credits would cost roughly $391 billion between 2022 and 2031. But the budget office’s updated score, based on estimates from the Joint Committee on Taxation, found that the clean energy tax breaks would cost at least $180 billion more than originally forecast over that time period.”
“In just eight months since Mr. Biden signed the bill, companies have announced plans to invest at least $150 billion in clean energy projects, including at least 46 new or expanded large-scale factories making everything from wind turbine towers to electric vehicle batteries… ‘Investment is moving forward five times faster than ever before,’ said Jason Grumet, the chief executive of the American Clean Power Association, a renewable energy trade group. ‘The early signs are really encouraging.’”
Why it matters: “On the flip side, it is also possible that the law ends up being far less potent than many experts are now assuming. Even with tax credits, many car buyers might be reluctant to purchase electric vehicles because of a lack of reliable charging stations. Developers of large-scale solar and wind farms could face increasing opposition in communities where they want to build… Because of all those variables, the law’s true price tag may not be known for years.”
4. U.S. manufacturing investment skyrockets
Why you should read it: Financial Times reporters Amanda Chu and Oliver Roeder outline more than $200 billion in private manufacturing investment that’s occurred since the passage of President Biden’s signature industrial policy legislation last year.
“Companies have committed more than $200bn to US manufacturing projects since Congress passed sweeping subsidies last year… The investment in semiconductor and clean tech investments is almost double the commitments made in the same sectors in the whole of 2021, and nearly 20 times the amount in 2019, according to data compiled by the Financial Times.”
“While most US manufacturing commitments since August have come from domestic suppliers, roughly a third are from foreign-headquartered companies, according to the FT’s data. Taiwan, South Korea and Japan make up the bulk of the foreign investment… The FT tracked more than 75 manufacturing projects worth at least $100mn each for plants to make semiconductors, electric vehicles, batteries, and renewable energy components, that have been announced since the bills became law in August.”
Why it matters: “The announcements would create about 82,000 jobs, according to the analysis. More projects are expected to be announced in the coming months as the US government provides more guidance on the tax credits.”
5. Construction equipment sales surge with America’s factory boom
Why you should read it: Wall Street Journal reporter Bob Tita notes that sales of construction equipment have surged along with new factory builds facilitated by the Biden administration’s industrial policies.
“Manufacturers of construction equipment, trucks, building supplies and industrial software are still ringing up sales… A backlog of orders stemming from supply-chain bottlenecks during the pandemic and higher demand from new factories under construction have boosted manufacturing companies, helping offset the effects of rising interest rates and weakening U.S. economic growth.”
“U.S. construction spending in March rose by an adjusted rate of 0.3% from February, according to the U.S. Census Bureau. Private nonresidential-construction spending was up by an adjusted 1% from February, powered by a 4.6% increase in manufacturing-related construction… New factories are driving demand for construction materials, including steel, as well as the systems and equipment needed to operate the plants once they are completed. Strength in such construction projects has helped Texas-based Caterpillar and other manufacturers exceed expectations of investors and industry analysts, some of whom have worried that economic turbulence could cut into sales or diminish profit guidance.”
Why it matters: “For North Carolina-based steelmaker Nucor, continued robust sales of building joists, warehouse racks, overhead doors and other products made from the company’s steel helped boost profit from its steel-products business by 42% from the first quarter last year to $971 million…Factory-software and automation-gear supplier Rockwell Automation ROK decrease; red down pointing triangle also is benefiting from the factory-building boom. The Milwaukee-based company reported a 26% increase in quarterly sales from a year earlier, and its operating margin rose by more than 5 percentage points to 21.3% from higher sales volumes and price increases… Companies’ supply-chain problems left customers to endure long waits for orders, or postpone purchases or projects. Manufacturing executives said that demand didn’t vanish and is now providing momentum for sales as the availability of parts improved in recent quarters.”
6. NIMBYs strike back against clean energy
Why you should read it: Jennifer Hiller of the Wall Street Journal reports on local resistance to solar and wind energy projects that have sprouted up across the country in the wake of the Biden administration’s massive public investment in clean energy.
“County-by-county battles are raging as wind and solar projects balloon in size, edge closer to cities and encounter mounting pushback in communities from Niagara Falls to the Great Plains and beyond. Projects have slowed. Even in states with a long history of building renewables, developers don’t know if they can get local permits or how long it might take.”
“In a pattern familiar across the U.S., Kansas wind developers years ago snapped up the rights to tracts of rural land in the less-populous western part of the state. That filled capacity on large transmission lines that deliver electricity over long distances, pushing newer projects east into more-populous areas such as Douglas County… Market demand and economies of scale have pushed solar and wind farm size to hundreds or thousands of acres. They may not sit on contiguous parcels, but instead spread throughout a community, increasing the odds of friction.”
Why it matters: “Despite soaring demand and available capital even before the Inflation Reduction Act was passed, U.S. clean power installations dipped 16% last year and 12% over 2020, according to the American Clean Power Association. It was the worst year for land-based wind installations since 2018.”
7. How solar power ate a California desert valley
Why you should read it: For the Guardian, Oliver Wainwright tells the tale of how industrial-scale solar farms consumed the Chuckwalla Valley in California’s Mojave Desert.
“Deep in the Mojave desert, about halfway between Los Angeles and Phoenix, a sparkling blue sea shimmers on the horizon. Visible from the I-10 highway, amid the parched plains and sun-baked mountains, it is an improbable sight: a deep blue slick stretching for miles across the Chuckwalla Valley, forming an endless glistening mirror… Over the last few years, this swathe of desert has been steadily carpeted with one of the world’s largest concentrations of solar power plants, forming a sprawling photovoltaic sea. On the ground, the scale is almost incomprehensible. The Riverside East Solar Energy Zone – the ground zero of California’s solar energy boom – stretches for 150,000 acres, making it 10 times the size of Manhattan.”
“Residents have watched ruefully for years as solar plants crept over the horizon, bringing noise and pollution that’s eroding a way of life in their desert refuge… Concerns have intensified following the recent news of a project, called Easley, that would see the panels come just 200 metres from their backyards. Residents claim that excessive water use by solar plants has contributed to the drying up of two local wells, while their property values have been hit hard, with several now struggling to sell their homes… But as the pace of construction has ramped up, so have voices questioning the cumulative impact of these projects on the desert’s populations – both human and non-human.”
Why it matters: “It is a crucial component of the United States’ green energy revolution. Solar makes up about 3% of the US electricity supply, but the Biden administration hopes it will reach 45% by 2050, primarily by building more huge plants like this across the country’s flat, empty plains… But there’s one thing that the federal Bureau of Land Management (BLM) – the agency tasked with facilitating these projects on public land – doesn’t seem to have fully taken into account: the desert isn’t quite as empty as it thought. It might look like a barren wilderness, but this stretch of the Mojave is a rich and fragile habitat for endangered species and home to thousand-year-old carbon-capturing woodlands, ancient Indigenous cultural sites – and hundreds of people’s homes.”
8. Why Germany’s retreat from nuclear power became a green disaster
Why you should read it: Environmental researcher Hannah Ritchie crunches the numbers in the Washington Post and finds that Germany’s decision to shutter its nuclear power plants amounts to a major defeat in the fight against climate change.
“[Germany] has the second-most carbon-intensive electricity grid in the Group of Seven, beaten only by Japan, which is now restarting some of its nuclear plants. In Europe, only Poland and the Czech Republic have a more carbon-intensive mix — and Poland is building more nuclear to fix this. To produce one unit of electricity, Germany emits about 8.5 times more carbon dioxide than Sweden and about 4.5 times more than France. And those figures were from 2022 when Germany’s last three nuclear plants were still contributing around 6 percent of its power.”
“Few countries in Europe or North America depend as heavily on coal, which supplies roughly one-third of Germany’s electricity. That’s about twice the average in the European Union. In Spain, coal contributes 3 percent, in the United Kingdom, 2 percent. Countries that get less than 1 percent of their electricity from coal include France, Sweden, Austria, Portugal and Switzerland…Dumping nuclear energy was always a higher priority than ridding the nation of fossil fuels. In 2000, the coalition government of the Social Democrats and Green Party announced plans to move Germany to renewables. They set targets to phaseout nuclear power by 2022 and move away from fossil fuels later… Had Germany kept its nuclear plants running from 2010, it could have slashed its use of coal for electricity to 13 percent by now. Today’s figure is 31 percent”
Why it matters: “Germany’s retreat from nuclear power is a cautionary tale. To close nuclear plants is to lose a large, safe, low-carbon source of energy and run the biggest risk of all: failing to avert catastrophic climate change.”
9. Why Henry Kissinger’s real genius is for business, not diplomacy
Why you should read it: On the occasion of former secretary of state Henry Kissinger’s 100th birthday, Ben Judah contends in The New Statesman that Kissinger’s real talents lay less in diplomacy than in business.
“…Kissinger – a less impressive US national security adviser than Brent Scowcroft, Zbigniew Brzezinski or, when it comes to actually winning wars, even Jake Sullivan, the present holder of the office – is one of the most important business and marketing stories of the last four decades. Through expert media handling he made himself a brand and turned that brand into a company: Kissinger Associates, the highly profitable global consulting firm… The impression is of a free-floating academic and shadow diplomat, always ready to offer the United States of America his free counsel. In fact the picture is rather different: since 1982 Kissinger has been the world’s leading consultant, a business figure, not a diplomatic one, whose paid counsel has been available to, among others, American Express, Fiat, Rio Tinto, Lehman Brothers, Merck, Heinz, Volvo, JP Morgan, and a slew of clients in Russia, China and the Gulf… Through Kissinger Associates he was a pioneer of the contemporary form of the Washington revolving door: the global consultancy. Where Kissinger blazed a trail, others have followed, creating leading firms such as Albright Stonebridge, the work of the former secretary of state Madeleine Albright, or WestExec Advisors, the work of the current secretary of state, Antony Blinken.”
“For the last 41 years Kissinger has specialised in interviews, in which obvious truisms, such as ‘China is rising’, or ‘Russia is revanchist’, are delivered with oracular grandeur. They are then sprinkled with a little bit of late 18th-century history just over the event horizon of the reader, for example an allusion to the Austrian statesman Metternich. The result is a forgettable blur… This is by design. Because the actual Kissinger genius over the last few decades was not these anodyne comments but the ability to listen – and therefore say exactly what the client, the sponsor or the establishment wants to hear. This is in sharp contrast to committed public thinkers on geostrategy such as Brzezinksi or George F Kennan, who often said what Washington didn’t want to hear. The result is that Kissinger, far from practising what his associates such as the political scientist Graham Allison call ‘the moral idealism of realism,’ has blown with the wind. Kissinger supported the Iraq war when it was the establishment line, the ‘reset’ with Russian when it was popular and now, contrary to all his previous writings, the admittance of Ukraine into Nato.”
Why it matters: “It should come as no surprise that powerful US corporations, with the intense local knowledge that this ageing resident of New York’s Upper West Side lacks, have sought him out. Why boards hire an ‘expert’ such as Kissinger to come and deliver undergraduate commentary about the Chinese ‘thinking in centuries’ or about Vladimir Putin being a ‘character out of Dostoevsky’ often has nothing to do with his insight. An outside expert is usually hired not to inform but to bless a decision or to help a partner win an argument. In the case of Kissinger, this has usually been related to business investment in China and occasionally in Russia. Meanwhile, across the world, powerful interests have sought him out to explain Washington… Brand management is the reason behind Kissinger’s intense efforts to shape – through journalists and historians such as Niall Ferguson – the story of his eight years in government. As a result, Henry Kissinger’s true biography remains unwritten. If Kissinger: The Global Consultant is ever published it will be an essential work of history – the best guide to how power and business operated and intermixed in the era of globalisation. Until then the myth and the interviews – as much advertorial as analysis – are just noise.”
Odds and Ends
Writer Tom Bissell reflects on discovering the Stoic philosophy of Marcus Aurelius after his father died…
How the late Gordon Lightfoot’s classic ballad “The Wreck of the Edmund Fitzgerald” became a pop hit…
How desert monoliths in Saudi Arabia and Jordan reveal the world’s oldest blueprints…
How Swiss researchers and brain implants enabled a man paralyzed from the waist down for a dozen years to walk again…
Researchers have discovered a whole new ecosystem in the unexplored depths of the Pacific Ocean between Hawaii and Mexico…
What I’m Listening To
Three selections from Alanis Morissette’s 1995 live London concert performance of her breakthrough album Jagged Little Pill.
And, of course, “You Oughta Know”
Image of the Month
