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Javier E

As Putin Threatens, Despair and Hedging in Europe - The New York Times - 0 views

  • As the leaders of the West gathered in Munich over the past three days, President Vladimir V. Putin had a message for them: Nothing they’ve done so far — sanctions, condemnation, attempted containment — would alter his intentions to disrupt the current world order.
  • In Munich, the mood was both anxious and unmoored, as leaders faced confrontations they had not anticipated. Warnings about Mr. Putin’s possible next moves were mixed with Europe’s growing worries that it could soon be abandoned by the United States, the one power that has been at the core of its defense strategy for 75 years.
  • Barely an hour went by at the Munich Security Conference in which the conversation did not turn to the question of whether Congress would fail to find a way to fund new arms for Ukraine, and if so, how long the Ukrainians could hold out. And while Donald Trump’s name was rarely mentioned, the prospect of whether he would make good on his threats to pull out of NATO and let Russia “do whatever the hell they want” with allies he judged insufficient hung over much of the dialogue.
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  • The dourness of the mood contrasted sharply with just a year ago, when many of the same participants — intelligence chiefs and diplomats, oligarchs and analysts — thought Russia might be on the verge of strategic defeat in Ukraine. There was talk of how many months it might take to drive the Russians back to the borders that existed before their invasion on Feb. 24, 2022. Now that optimism appeared premature at best, faintly delusional at worst.
  • Nikolai Denkov, the prime minister of Bulgaria, argued that Europeans should draw three lessons from the cascade of troubles. The war in Ukraine was not just about gray zones between Europe and Russia, he argued, but “whether the democratic world we value can be beaten, and this is now well understood in Europe.”
  • “European defense was a possibility before, but now it’s a necessity,” said Claudio Graziano, a retired general from Italy and former chairman of the European Union Military Committee. But saying the right words is not the same as doing what they demand.
  • third, they needed to separate Ukraine’s urgent needs for ammunition and air defense from longer-term strategic goals.
  • Some attendees found the commitments made by the leaders who showed up uninspiring, said Nathalie Tocci, director of Italy’s Institute of International Affairs. “Kamala Harris empty, Scholz mushy, Zelensky tired,
  • Second, European nations have realized that they must combine their forces in military, not just economic endeavors, to build up their own deterrence
  • “I feel underwhelmed and somewhat disappointed” by the debate here, said Steven E. Sokol, president of the American Council on Germany. “There was a lack of urgency and a lack of clarity about the path forward, and I did not see a strong show of European solidarity.
  • now two-thirds of the alliance members have met the goal of spending 2 percent of their gross domestic product on defense — up from just a handful of nations 10 years ago. But a few acknowledged that goal is now badly outdated, and they talked immediately about the political barriers to spending more.
  • the prospect of less American commitment to NATO, as the United States turned to other challenges from China or in the Middle East, was concentrating minds.
  • the fundamental disconnect was still on display: When Europeans thought Russia would integrate into European institutions, they stopped planning and spending for the possibility they might be wrong. And when Russia’s attitude changed, they underreacted.
  • “This is 30 years of underinvestment coming home,” said François Heisbourg, a French defense analyst, who called them “les trente paresseuses” — the 30 lazy years of post Cold-War peace dividends, in contrast to the 30 glorious years that followed World War II.
  • What was important for Europeans to remember was that this hot war in Ukraine was close and could spread quickly, Ms. Kallas said. “So if you think that you are far away, you’re not far away. It can go very, very fast.”
  • Dmytro Kuleba, the foreign minister of embattled Ukraine, was blunter. “I think our friends and partners were too late in waking up their own defense industries,” he said. “And we will pay with our lives throughout 2024 to give your defense industries time to ramp up production.”
Javier E

Opinion | Is This a Sputnik Moment? - The New York Times - 0 views

  • Both the Soviet Union and United States conducted high-altitude nuclear detonation (HAND) tests in the 1950s and 1960s, including the U.S. Starfish Prime test in 1962 when the United States detonated a 1.4 megaton warhead atop a Thor missile 250 miles above the Earth. The explosion created an electromagnetic pulse that spread through the atmosphere, frying electronics on land hundreds of miles away from the test, causing electrical surges on airplanes and in power grids, and disrupting radio communications. The boosted nuclear radiation in space accumulated on satellites in orbit, damaging or destroying one-third of them.
  • Nor is it new for Russia to violate nuclear arms control agreements. In recent years, Russia has violated the 1987 Intermediate-Range Nuclear Forces Treaty, suspended its participation in the 2010 New Strategic Arms Reduction Treaty, and de-ratified the Comprehensive Test Ban Treaty. Backing out of arms control commitments is part of Russia’s modus operandi.
  • What appears unprecedented now is that Russia could be working toward deploying nuclear weapons on satellites, which are constantly orbiting the Earth, to be detonated at times and locations of Moscow’s choosing.
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  • Russian military doctrine states that Russia would use nuclear weapons in the event of attacks against key Russian assets or threats to the existence of the state, and experts believe Russia could use nuclear weapons first in a crisis to signal resolve.
  • Russia has seen how important space-based assets can be on the battlefield in Ukraine. Starlink, with its thousands of satellites orbiting Earth, provides Ukrainian forces with uninterrupted communication. The U.S. Department of Defense openly discusses its investments in large satellite constellations. Hundreds of satellites used for missile warning, intelligence and communications are seen as a way to be more resilient against a variety of growing space threats. Moscow would look for ways to target these large satellite constellations and to erode the advantage they provide.
  • Russia has been testing weapons that target space capabilities or using them on the battlefield in Ukraine. In November 2021, Moscow conducted an antisatellite test by launching a missile at one of its own defunct satellites. It has also employed systems designed to jam Starlink and GPS to degrade Ukraine’s communication systems, as well as the drones and munitions the country uses to defend itself. It is not surprising that Moscow would seek to develop a more powerful way to cause widespread damage to constellations of satellites.
  • But a nuclear detonation in space is indiscriminate. It would degrade or destroy any satellites in its path and within the same orbital region. It wouldn’t just affect U.S. satellites but also the aggressor’s own satellites, as well as an unknown number of satellites owned by the over 90 countries operating in space, and astronauts living on the International Space Station and Chinese space station
  • Russia, however, has less to lose: Its once vaunted space program is in decline, dinged by sanctions, and said it intends to withdraw from the International Space Station program after 2024. Moscow is now well behind China in its total number of operating on-orbit satellites.
  • Third, we need to be realistic about prospects for future arms control with Russia. Moscow has shown a disregard for its treaty commitments. Just last month, Moscow rejected attempts by the Biden administration to restart bilateral arms control talks. Rather than trying again, the administration should instead focus on strengthening deterrence by improving our own capabilities and building multilateral coalitions for responsible nuclear behavior
  • Finally, policymakers need to protect our intelligence sources and intelligence gathering methods
  • With Russian officials already demanding proof of what the United States knows, declassifying those sources and methods plays directly into Moscow’s hands and jeopardizes those channels for future intelligence collection.
Javier E

Mistral, the 9-Month-Old AI Startup Challenging Silicon Valley's Giants - WSJ - 0 views

  • Mensch, who started in academia, has spent much of his life figuring out how to make AI and machine-learning systems more efficient. Early last year, he joined forces with co-founders Timothée Lacroix, 32, and Guillaume Lample, 33, who were then at Meta Platforms’ artificial-intelligence lab in Paris. 
  • hey are betting that their small team can outmaneuver Silicon Valley titans by finding more efficient ways to build and deploy AI systems. And they want to do it in part by giving away many of their AI systems as open-source software.
  • Eric Boyd, corporate vice president of Microsoft’s AI platform, said Mistral presents an intriguing test of how far clever engineering can push AI systems. “So where else can you go?” he asked. “That remains to be seen.”
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  • Mensch said his new model cost less than €20 million, the equivalent of roughly $22 million, to train. By contrast OpenAI Chief Executive Sam Altman said last year after the release of GPT-4 that training his company’s biggest models cost “much more than” $50 million to $100 million.
  • Brave Software made a free, open-source model from Mistral the default to power its web-browser chatbot, said Brian Bondy, Brave’s co-founder and chief technology officer. He said that the company finds the quality comparable with proprietary models, and Mistral’s open-source approach also lets Brave control the model locally.
  • “We want to be the most capital-efficient company in the world of AI,” Mensch said. “That’s the reason we exist.” 
  • Mensch joined the Google AI unit then called DeepMind in late 2020, where he worked on the team building so-called large language models, the type of AI system that would later power ChatGPT. By 2022, he was one of the lead authors of a paper about a new AI model called Chinchilla, which changed the field’s understanding of the relationship among the size of an AI model, how much data is used to build it and how well it performs, known as AI scaling laws.
  • Mensch took a role lobbying French policymakers, including French President Emmanuel Macron, against certain elements of the European Union’s new AI Act, which Mensch warned could slow down companies and would, in his view, do nothing to make AI safer. After changes to the text in Brussels, it will be a manageable burden for Mistral, Mensch says, even if he thinks the law should have remained focused on how AI is used rather than also regulating the underlying technology.  
  • For Mensch and his co-founders, releasing their initial AI systems as open source that anyone could use or adapt free of charge was an important principle. It was also a way to get noticed by developers and potential clients eager for more control over the AI they use
  • Mistral’s most advanced models, including the one unveiled Monday, aren’t available open source. 
Javier E

Opinion | A Titanic Geopolitical Struggle Is Underway - The New York Times - 0 views

  • There are many ways to explain the two biggest conflicts in the world today, but my own shorthand has been that Ukraine wants to join the West and Israel wants to join the Arab East — and Russia, with Iran’s help, is trying to stop the first, and Iran and Hamas are trying to stop the second.
  • They reflect a titanic geopolitical struggle between two opposing networks of nations and nonstate actors over whose values and interests will dominate our post-post-Cold War world — following the relatively stable Pax Americana/globalization era that was ushered in by the fall of the Berlin Wall in 1989 and the collapse of the Soviet bloc, America’s chief Cold War rival.
  • On one side is the Resistance Network, dedicated to preserving closed, autocratic systems where the past buries the future. On the other side is the Inclusion Network, trying to forge more open, connected, pluralizing systems where the future buries the past.
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  • “What Putin wants is to transform the world order” that evolved since World War II and the post-Cold War — where “the competition between nations was about who can be richer and who can help their people prosper the most . … Putin hates that world because he loses in that world — his system is a loser in a peaceful, global, wealth-enhancing paradigm. And so what he wants is to move us back to dog-eat-dog, to a 19th-century, great power competition, because he thinks he can, if not win, be more effective there. … Let’s not think that this is a Ukrainian problem; this is a problem for us all.”
  • These wars very much are our business — and now clearly inescapable, since we’re deeply entwined in both conflicts. What’s crucial to keep in mind about America — as the leader of the Inclusion Network — is that right now we’re fighting the war in Ukraine on our terms, but we’re fighting the war in the Middle East on Iran’s terms.
  • CNN recently described, per a source familiar with it, a declassified U.S. intelligence assessment provided to Congress saying that Russia had lost 87 percent of its preinvasion active-duty ground troops and two-thirds of its tanks that it had prior to its invasion of Ukraine. Putin can still inflict a lot of damage on Ukraine with missiles, but his dream of occupying the whole country and using it as a launching pad to threaten the Inclusion Network — particularly the NATO-protected European Union — is now out of reach. Thank you, Kyiv.
  • At a breakfast with NATO leaders devoted to the Ukraine issue at Davos this year, Canada’s deputy prime minister, Chrystia Freeland, noted that it is we, the West, who should be thanking the Ukrainians, not forcing them to beg us for more weapons.
  • China under President Xi Jinping straddles the two networks, along with much of what’s come to be called the global south. Their hearts, and often pocketbooks, are with the Resistors but their heads are with the Includers
  • the Resistance Network “is orchestrated by Iran, Islamists and jihadists” in a process they refer to as the “unity of battlefields.” This network, he noted, “seeks to bridge militias, rejectionists, religious sects and sectarian leaders,” creating an anti-Israel, anti-American, anti-Western axis that can simultaneously pressure Israel in Gaza, in the West Bank and on the Lebanon border — as well as America in the Red Sea, in Syria and in Iraq and Saudi Arabia from all directions.
  • In stark contrast, Koteich said, stands the Inclusion Network, one that’s focused on “weaving together” global and regional markets instead of battlefronts, business conferences, news organizations, elites, hedge funds, tech incubators and major trade routes. This inclusion network, he added, “transcends traditional boundaries, creating a web of economic and technological interdependence that has the potential to redefine power structures and create new paradigms of regional stability.”
  • things are different in the Middle East. There, it is Iran that is sitting back comfortably — indirectly at war with Israel and America, and sometimes Saudi Arabia, by fighting through Tehran’s proxies: Hamas in Gaza, the Houthis in Yemen, Hezbollah in Lebanon and Syria, and Shiite militias in Iraq.
  • Iran is reaping all the benefits and paying virtually no cost for the work of its proxies, and the U.S., Israel and their tacit Arab allies have not yet manifested the will or the way to pressure Iran back — without getting into a hot war, which they all want to avoid.
  • The members of the Resistance Network are great at tearing down and breaking stuff, but, unlike the Inclusion Network, they have shown no capacity to build any government or society to which anyone would want to emigrate, let alone emulate
  • For all of these reasons, this is a moment of great peril as well as great opportunity — especially for Israel. The competition between the Resistance Network and the Inclusion Network means that the region has never been more hostile or more hospitable to accepting a Jewish state.
Javier E

Opinion | A.I. Is Endangering Our History - The New York Times - 0 views

  • Fortunately, there are numerous reasons for optimism about society’s ability to identify fake media and maintain a shared understanding of current events
  • While we have reason to believe the future may be safe, we worry that the past is not.
  • History can be a powerful tool for manipulation and malfeasance. The same generative A.I. that can fake current events can also fake past ones
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  • there is a world of content out there that has not been watermarked, which is done by adding imperceptible information to a digital file so that its provenance can be traced. Once watermarking at creation becomes widespread, and people adapt to distrust content that is not watermarked, then everything produced before that point in time can be much more easily called into question.
  • countering them is much harder when the cost of creating near-perfect fakes has been radically reduced.
  • There are many examples of how economic and political powers manipulated the historical record to their own ends. Stalin purged disloyal comrades from history by executing them — and then altering photographic records to make it appear as if they never existed
  • Slovenia, upon becoming an independent country in 1992, “erased” over 18,000 people from the registry of residents — mainly members of the Roma minority and other ethnic non-Slovenes. In many cases, the government destroyed their physical records, leading to their loss of homes, pensions, and access to other services, according to a 2003 report by the Council of Europe Commissioner for Human Rights.
  • The infamous Protocols of the Elders of Zion, first published in a Russian newspaper in 1903, purported to be meeting minutes from a Jewish conspiracy to control the world. First discredited in August 1921, as a forgery plagiarized from multiple unrelated sources, the Protocols featured prominently in Nazi propaganda, and have long been used to justify antisemitic violence, including a citation in Article 32 of Hamas’s 1988 founding Covenant.
  • In 1924, the Zinoviev Letter, said to be a secret communiqué from the head of the Communist International in Moscow to the Communist Party of Great Britain to mobilize support for normalizing relations with the Soviet Union, was published by The Daily Mail four days before a general election. The resulting scandal may have cost Labour the election.
  • As it becomes easier to generate historical disinformation, and as the sheer volume of digital fakes explodes, the opportunity will become available to reshape history, or at least to call our current understanding of it into question.
  • Decades later Operation Infektion — a Soviet disinformation campaign — used forged documents to spread the idea that the United States had invented H.I.V., the virus that causes AIDS, as a biological weapon.
  • Fortunately, a path forward has been laid by the same companies that created the risk.
  • In indexing a large share of the world’s digital media to train their models, the A.I. companies have effectively created systems and databases that will soon contain all of humankind’s digitally recorded content, or at least a meaningful approximation of it.
  • They could start work today to record watermarked versions of these primary documents, which include newspaper archives and a wide range of other sources, so that subsequent forgeries are instantly detectable.
  • many of the intellectual property concerns around providing a searchable online archive do not apply to creating watermarked and time-stamped versions of documents, because those versions need not be made publicly available to serve their purpose. One can compare a claimed document to the recorded archive by using a mathematical transformation of the document known as a “hash,” the same technique the Global Internet Forum to Counter Terrorism, uses to help companies screen for known terrorist content.
  • creating verified records of historical documents can be valuable for the large A.I. companies. New research suggests that when A.I. models are trained on A.I.-generated data, their performance quickly degrades. Thus separating what is actually part of the historical record from newly created “facts” may be critical.
  • Preserving the past will also mean preserving the training data, the associated tools that operate on it and even the environment that the tools were run in.
  • Such a vellum will be a powerful tool. It can help companies to build better models, by enabling them to analyze what data to include to get the best content, and help regulators to audit bias and harmful content in the models
Javier E

How the "hell camp" of Ohrdruf changed Eisenhower's view of the Second World War - and ... - 0 views

  • The key difference between the liberation of Auschwitz and Ohrdruf lies not in the reactions of the first liberators on the scenes but in what came after. The accounts of Red Army soldiers and American GIs are actually remarkably similar: they both speak of survivors as “walking skeletons;” they both describe the squalor the camp’s inmates lived in; they both mention the smell of death that lingered in the air and permeated far beyond the confines of the camp—which led to similar observations when locals living near the camps claimed to know nothing of what happened there to be deemed as nothing less than lies or willful ignorance
  • This impression was reinforced when the mayor of Gotha, the nearest town to Ohrdruf, wrote in his suicide note following his forced visit of the camp: “We did not know, but we knew.”
  • The difference was that Eisenhower was determined that the world should never forget what he saw. His Red Army counterparts were also quick to document what they found, but their leader Joseph Stalin was uninterested in the Holocaust as a reality. In the hierarchy of Nazi victims that Stalin created, no other group could surpass the suffering of the Soviet Union.
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  • Meanwhile Western media outlets were unsure as to what to make of the revelations of the scale of the murderous camp system.
  • ut Eisenhower had no doubt about what he saw at Ohrdruf. This “hell camp” was a site of acts so barbarous that he struggled to comprehend that they had been conducted by a civilized, modern society such as Germany’s. The only way to make sense of it, he decided, was to let people know about what occurred there.
  • Eisenhower unleashed an unprecedented press offensive topublicise and document the Holocaust. Not only did he order the soldiers under his command to visit Ohrdruf and then the other camps that were being liberated, but he also ordered the preservation of camp records and that interviews be conducted with survivors, so that no one in the future could claim what he saw was “propaganda.”
  • He also requested and then facilitated delegations of politicians, policy makers, journalists, and others to visit the camps for themselves. Seeing Ohrdruf changed how Eisenhower saw the war. Nazis became more than opponents to be defeated: they were perpetuating an evil that needed to be destroyed. Eisenhower had born witness to the crime of the century. He now became one of the first to say such events should “never again” occur.
Javier E

Jake Sullivan's Revolution - POLITICO - 0 views

  • Sullivan first had to dismantle establishment orthodoxies within himself — the same orthodoxies he now sought to undo at Brookings: That globalization and free trade were an unalloyed good, growing economies and improving people’s lives in the process. What was good for the stock market, in effect, was great for everybody. Given enough time, swelling wallets would produce a steady middle class, one that demands its political and human rights from its government. Even the most repressive regimes, the thinking went, would eventually crumble under the weight of inflowing capital. Consistent pressure via greenbacks did the most good for the most people.
  • “Those were the heady days when the mainstream foreign policy consensus was that globalization was a force for good,” Sullivan recalled in a 2017 interview. There was, of course, reason to think this. Capitalism helped keep the Soviet Union at bay, China still wasn’t a major power and building the economies of enemies turned them into friends. Globalization, per its champions, had the benefit of making many people rich while making the world safer in general and U.S. foreign policy less costly.
  • “After the Second World War, the United States led a fragmented world to build a new international economic order. It lifted hundreds of millions of people out of poverty. It sustained thrilling technological revolutions. And it helped the United States and many other nations around the world achieve new levels of prosperity. But the last few decades revealed cracks in those foundations,”
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  • In other words, the Marshall Plan and the tech boom during the 1990s were products of their time and place. They wouldn’t necessarily have the desired effects in a modern context.
  • “A shifting global economy left many working Americans and their communities behind. A financial crisis shook the middle class. A pandemic exposed the fragility of our supply chains. A changing climate threatened lives and livelihoods. Russia’s invasion of Ukraine underscored the risks of overdependence.”
  • What was the solution? Instead of rampant globalization, Sullivan’s pitch was that a reenergized American economy made the country stronger. It was time to remake the Rust Belt into a Cobalt Corridor, to establish industries that led not only to blue-collar work but to azure-collared careers. If that was done right, a strengthened America could act more capably around the globe.
  • “This moment demands that we forge a new consensus. That’s why the United States, under President Biden, is pursuing a modern industrial and innovation strategy — both at home and with partners around the world,
  • Implicitly, Sullivan said the main assumptions undergirding America’s foreign and economic policy had been wrong for decades. China, and the Washington belief that liberalized markets would eventually lead to democracy within the halls of power in Beijing, was the most glaring example.
  • “By the time President Biden came into office, we had to contend with the reality that a large non-market economy had been integrated into the international economic order in a way that posed considerable challenges,” he said, citing China’s large-scale subsidization of multiple sectors that crushed America’s competitiveness across industries. Making matters worse, Sullivan continued, “economic integration didn’t stop China from expanding its military ambitions.” It also didn’t stop countries like Russia from invading their neighbors.
  • Standing in front of the esteemed audience, Sullivan was telling them he didn’t want to be caught flat-footed as the global economy reshaped around them. The U.S. government would be proactive, prepared and proud in search of an industrial strategy to undergird American power. Without saying the words, he was offering a plan to make America great again.
  • A self-proclaimed “A-Team” came together to move beyond the Trump era, but in some ways they embraced elements of it. Not the nativist demagoguery, but the need to return to fundamentals: a healthy middle class powered by a humming industrial base, a humility about what the U.S. military alone can accomplish, a solid cadre of allies, attention to the most existential threats and a refresh of the tenets that sustain American democracy.
  • “This strategy will take resolve — it will take a dedicated commitment to overcoming the barriers that have kept this country and our partners from building rapidly, efficiently, and fairly as we were able to do in the past,”
Javier E

Opinion | Bidenomics: The Queen Bee Is Jennifer Harris - The New York Times - 0 views

  • I was thrilled when the Biden administration came in with a plan for big federal investments in the American industrial base, tariffs, support for labor unions and actions against monopolies. No one knew what to call it — Post-neoliberalism? Democratic capitalism? Neopopulism? — but for the first time in generations a U.S. administration was saying that people should control the market, not the other way around.
  • But if it was the right path, why didn’t more voters trust President Biden on the economy?
  • To understand who Ms. Harris is, you have to know who she used to be.
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  • As a young State Department policy planner in the 2000s, she was a lonely voice in Washington raising the alarm about the rise of China. She pushed for tariffs and against trade agreements before it was cool, and was an author of a book called “War by Other Means” about how blind faith in free markets put the United States at a geopolitical disadvantage. For years, she felt like an oddball in Washington, where both parties were still in thrall to neoliberalism.
  • The Hewlett Foundation hired her as the head of an initiative that has given away $140 million so far to people who are devising a new economic philosophy. Then she served a stint in the White House. Today, she’s an intellectual leader of a growing, bipartisan consensus
  • She fell in love with economics and studied it at Wake Forest. After she joined a student delegation to a NATO summit in Prague in 2002, a faculty adviser on that trip offered her a job in Washington working at the National Intelligence Council. In those early years, she believed what everyone else in Washington believed about the economy — that governments ought not meddle with it.
  • if Mr. Trump correctly identified a problem — “China is eating our lunch” — he did not solve it, beyond putting tariffs on Chinese products. His tax cut for the rich hurt rather than helped matters.
  • It’s the Biden administration that came in with a plan to build an economy that was good for workers, not just shareholders, using some strategies Ms. Harris had been talking about for years.
  • The thinking behind it goes like this: Unquestioning belief in the free market created a globalism that funneled money to the 1 percent, which has used its wealth to amass political power at the expense of everyone else. It produced free trade agreements that sent too many U.S. factories to China and rescue plans after the 2008 financial crisis that bailed out Wall Street instead of Main Street.
  • It was her job to track China’s use of subsidies, industrial espionage and currency manipulation to fuel its rise as a manufacturing powerhouse. Ms. Harris argued that tariffs on China were a necessary defense. Nobody agreed. “I was kind of just banging my head against this wall,” she told me. “The wall was a foreign policy establishment that saw markets as sacrosanct.”
  • Barack Obama campaigned on a pledge to renegotiate NAFTA, but he struck up a new trade deal instead — the Trans-Pacific Partnership. Ms. Harris argued against it. “We didn’t have the foggiest idea” of what it would do to our economy, she told me. Nobody listened.
  • it sent Democrats back to the intellectual drawing board. Larry Kramer, then the president of the Hewlett Foundation, recruited her in 2018 to promote alternatives to ideas that had guided U.S. policy for decades. He hoped she could do for free-market skepticism what Milton Friedman and his allies had done for free-market fundamentalism, which became policy under the Reagan administration and eventually was embraced by both parties as truth.
  • She has since rejoined the Hewlett Foundation, where she funds people who are proposing new solutions to economic problems. One grantee, the conservative think tank American Compass, promotes the idea of a domestic development bank to fund infrastructure — an idea with bipartisan appeal.
  • But the work that Ms. Harris and others in the Biden administration have done is unfinished, and poorly understood. The terms “Bidenomics” and “Build Back Better” don’t seem to resonate
  • Ms. Harris acknowledges that these ideas haven’t yet taken hold in the broader electorate, and that high interest rates overshadow the progress that’s been made. It’s too early for voters to feel it, she told me: “The investments Biden has pushed through aren’t going to be felt in a month, a year, two years.”
  • she celebrates the fact that leaders across the political spectrum are embracing the idea that Americans need to “get back to building things in this country.” This election has no candidates blindly promoting the free market. The last one didn’t either. In the battle of ideas, she has already won.
Javier E

Europe Has a New Economic Engine: American Tourists - WSJ - 0 views

  • the Mediterranean rush is turning Europe’s recent economic history on its head. In the 2010s, Germany and other manufacturing-heavy economies helped drag the continent out of its debt crisis thanks to strong exports of cars and capital goods, especially to China.
  • Today, Italy, Spain, Greece and Portugal contribute between a quarter and half of the bloc’s annual growth. 
  • While Germany’s economy is flatlining, Spain is Europe’s fastest-growing big economy. Nearly three-quarters of the country’s recent growth and one in four new jobs are linked to tourism
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  • In Greece, an unlikely economic star since the pandemic, as many as 44% of all jobs are connected to tourism. 
  • Can Europe’s emerging “museum economy” support sustained wealth creation and the expansive welfare systems Europeans have become accustomed to since the end of World War II? And what happens if the dollar falls and the tourists leave?
  • Rent and other living expenses are rising in hot spots, making it harder for many locals to make ends meet. A heightened focus on tourism, which turns a quick profit but remains a low-productivity activity, tethers these economies to a highly cyclical industry
  • It also risks keeping workers and capital from more profitable areas, like tech and high-end manufacturing. 
  • some economists, residents and politicians are concerned about the boom’s long-term implications.
  • “It is literally, for Americans right now, the place to go,”
  • The strong dollar—and a powerful post-Covid recovery—has empowered millions of Americans who would have vacationed in the U.S. before the pandemic. They are now finding they can afford a lavish European holiday.
  • One reason is the brutal sovereign debt crisis that hit the continent’s south especially hard just over a decade ago. Unable to stimulate demand with public spending or to energize exports by devaluing their currency—the euro, which is shared by 20 states—those countries could only boost their competitiveness by lowering wages.
  • “Your dollar goes a lot further,” Cross said over coffee in the lobby of her five-star hotel. “You don’t feel you’re scrounging as much.”
  • Tourism now generates one-fifth of economic output in Lisbon and supports one in four jobs. That boom has reverberated far beyond the capital.
  • Portugal’s gross domestic product grew nearly 8% between 2019 and 2024, compared with less than 1% for Germany,
  • The government recorded a rare 1.2% of GDP budget surplus last year, and its debt-to-GDP ratio is expected to fall to 95% this year, the lowest since 2009
  • Portugal’s population is growing again after years of decline, thanks in part to an influx of migrant workers and to various tax incentives and investor visas that have attracted high-income workers. 
  • Moedas, Lisbon’s mayor, says there’s room for further growth. For a city that doubles in size to around one million every day, including commuters, only around 35,000 are tourists, he said. “We are very far from a situation of so-called overtourism.”
  • The trend is part of a global readjustment following the Covid-19 lockdowns. Spending on travel and hospitality worldwide grew roughly seven times faster than the global economy over the past two years, according to Oxford Economics. That pattern is expected to continue for the next decade, though to a lesser degree.
  • Europe, especially southern Europe, has benefited more than many other regions. Though it is home to just 5% of the world’s population, the European Union received around one-third of all international tourist dollars—more than half a trillion dollars—last year. This is up roughly threefold over two decades, and compares with about $150 billion for the U.S., where tourism has been slower to rebound.
  • In Portugal, a country of 10 million that juts out into the North Atlantic from Spain, Americans recently surpassed Spaniards as the biggest group of foreign tourists. 
  • This and a real estate collapse that left hundreds of thousands of workers suddenly available made the region’s tourist industry ultracompetitive, much cheaper than Caribbean beach destinations and on a par with Latin American destinations like Mexico. 
  • Once an owner of TAP, Neeleman increased the number of direct flights to the U.S. eightfold between 2015 and 2020, adding major hubs such as JFK and Boston Logan, betting that would open up an untapped market. As bookings soared, other U.S. airlines followed. 
  • “It was actually comical, because I went from knowing no one who had been to Portugal to everyone telling me they were going to Portugal,”
  • For Gonçalo Hall, a 36-year-old tech worker, the influx of foreign cash that has transformed Lisbon has been overwhelmingly beneficial for the city. When he lived in the capital 15 years ago, he wouldn’t walk in the historic downtown after 8 p.m. It was “full of homeless people, not safe. Lots of empty and abandoned buildings,” he said. 
  • “The quality of life in Lisbon doesn’t match the prices. Even expats are leaving,” said Hall, who moved to the Atlantic island of Madeira during the pandemic and continues to work remotely.  
  • The average Portuguese employee earns around €1,000 a month after tax, or around $1,100 a month, and only 2% earn more than €2,000. A one-bedroom apartment in Lisbon can easily cost more than €500,000 to buy, or over €1,200 a month to rent. Rents in nearby cities are also climbing as people leave the capital, squeezed out as lucrative short-term rentals transform the housing market. 
  • Jessica Ribeiro, a 35-year-old sociologist, pays around €490 a month for an apartment that she shares with her ex-husband in a town close to Lisbon. Neither can afford to leave. Both make a little more than the minimum wage of €820 a month, and soaring rents mean it is impossible to find an apartment in the neighborhood for less than €700, Ribeiro said. 
  • “The harm that tourism has brought is infinitely bigger than the benefits,” Ribeiro said. “It sends people away from their place of work, making their lives much harder.” 
  • A frequent complaint from residents and housing advocates is that some of the boom’s biggest winners are American companies, from Airbnb to Uber, which often pay little tax in the places where they do most of their business.
  • Lisbon is cracking down on Airbnbs and increasing taxes on tourists, doubling the nightly city tax from €2 to €4, which should raise €80 million a year. Airbnb has paid Lisbon and Porto, Portugal’s two biggest cities, more than €63 million after entering into voluntary tax collection agreements with local officials. Moedas said he is considering “a bit more regulation” of the city’s many Ubers, whose drivers he said don’t always respect traffic rules. 
  • Around nine in 10 Airbnb hosts in Portugal rent their family home and almost half say the extra income helps them afford to stay in their homes, according to a spokesperson for the company. “Guests using our platform account for just 10% of total nights booked in Portugal, and we follow the rules and only allow listings that are registered with local authorities,”
  • Higher rents are forcing many businesses and cultural and social spaces catering to locals to close, according to Silva. “This is not an economy that is serving the needs of the majority of people,” she said.
  • Signs of discontent are bubbling up across the region. Tens of thousands of local residents marched in Spain’s Balearic and Canary islands in recent months to protest mass tourism and overcrowding. On Mallorca, activists have put up fake signs at some popular beaches warning in English of the risk of falling rocks or dangerous jellyfish to deter tourists, according to social-media posts.
  • Serving foreigners is difficult to scale up and is more exposed to economic headwinds. Like the discovery of oil, southern Europe’s new focus on tourism can crowd out higher-value activities by hogging capital and workers, a phenomenon some economists have dubbed the “beach disease.”
  • “Portugal isn’t an industrialized country. It’s just the playground of the EU,” said Priscila Valadão, a 43-year-old administrative assistant in Lisbon. She makes €905 a month and rents a room from a friend for €250 a month. “The type of jobs being offered…are restricted to a type of activity that really doesn’t enrich the country,”
  • For Europe’s policymakers, having people open hotels or restaurants is easier than incentivizing them to build up advanced manufacturing, which is capital intensive and takes a long time to pay off, said Marcos Carias, an economist with French insurer Coface. 
  • “Tourism is the easy way out,” Carias said. “What is the incentive to look for ingenuity and go through the pain of creating new economic value if tourism works as a short-term solution?”
  • Proponents say tourism attracts capital to poor regions, and can serve as a base to build a more diversified economy. Lisbon’s Moedas said he is trying to leverage the influx of foreign visitors to build up sectors such as culture and technology, including by developing conferences and cultural events. 
  • “Some extreme left parties basically say we need to reduce tourism,” Moedas said, but that is the wrong approach. “What we have to do is to increase other sectors like innovation, technology…. We should still invest in tourism, but we should go up the ladder.”
  • While Dias, the hotel owner, is diversifying into nightlife, he refuses to envisage a future where the sector would have to rely heavily on visitors from elsewhere.
  • More than one-third of highly qualified Portuguese students leave the country after graduating,
  • Even higher-paid technology workers have started decamping to cheaper places. 
  • Tiago Araújo, chief executive of tourism tech startup HiJiffy, has held on to his employees but says many of them have been moving out of Lisbon. The trend, which started during Covid, is now being primarily driven by the housing crisis.
  • In Athens, Mayor Haris Doukas says he is working on extending the tourist season, increasing the average length of stay and promoting specific types of tourism, such as organizing conferences and business meetings, to attract visitors with higher purchasing power. He’s also called for new taxes to help the city accommodate the millions of additional tourists thronging to the ancient capital.
  • If Americans stop coming to Lisbon, he said, “I don’t think we can charge this kind of [price] because we will have to go to Europeans, and the Europeans, they don’t have money.”
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