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13/08/2024

The CEO of Abbott on Revamping Its Breakthrough Diabetes Device

By Robert B. Ford
September–October, 2024
HARVARD BUSINESS REVIEW

Summary
In 2008 Abbott introduced a revolutionary new device, FreeStyle Navigator, designed to improve the lives of the world’s more than 500 million diabetes patients by offering continuous glucose monitoring with technology that could translate an electrochemical signal from the body into precise, real-time data. Doctors and patients who tried the device appreciated it—but it was bulky, hard to manufacture, and expensive. And without widespread adoption, it wouldn’t have the hoped-for impact.

Abbott’s leaders soon realized that they needed to go back to the drawing board. Four years later they launched FreeStyle Libre, a reimagined continuous glucose monitoring (CGM) system in which an even smaller sensor applied to a patient’s arm sends data directly to a smartphone app every minute. It is now used by millions globally, and by the end of 2024 it will have generated more than $5 billion in revenue, making it one of the most successful medical devices—as measured by usage and sales—in history. The pivot from the Navigator to the Libre was a deeply consequential decision for Abbott, and others can learn from the principles the company’s leaders followed to arrive at and then execute on that choice.
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𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬

Today more than 500 million people have diabetes, an autoimmune disease that causes the pancreas to produce little or no insulin, leaving sufferers unable to regulate the glucose in their bodies and bloodstreams. It’s one of the most prevalent and fastest-growing chronic medical conditions in the world, expected to affect more than 740 million people by 2045. And when it’s unmonitored and untreated, it can quickly become life-threatening.
In 2008 Abbott introduced a revolutionary new device, FreeStyle Navigator, designed to improve the lives of people with diabetes. Before its launch they had to check their glucose levels up to 10 times a day with painful finger-stick blood draws. Navigator instead offered continuous monitoring using wired enzyme technology that could translate an electrochemical signal from the body into precise, real-time glucose data via a sensor attached to the arm and connected to a separate receiver.
The doctors and people who tried the device appreciated it. One mother of a child with Type 1 diabetes told us that Navigator had given her enough peace of mind to sleep through the night for the first time since his diagnosis, knowing that if a problem occurred, the system would sound an alarm. But Navigator was bulky, hard to manufacture, and expensive. And without widespread adoption, it wouldn’t have the impact we had hoped. Within a year we knew we needed to go back to the drawing board.
It’s difficult to scrap a product that you spent years developing and that many customers have come to rely on. But that’s just what we did. Our core enzyme technology would remain, but we needed to design a delivery device that was simpler, more user-friendly, and affordable.
In 2014 we launched FreeStyle Libre, a reimagined continuous glucose monitoring (CGM) system in which a much smaller sensor applied to the back of the upper arm sent data to a handheld reader—now a smartphone app. Retailing today at around $140 a month (although the cost is widely reimbursed, so most people pay nothing or a small co-pay), it is used by millions globally. Last year it generated more than $5 billion in revenue, making it the most successful medical device—as measured by usage and sales—ever.

Our pivot from Navigator to Libre was one of Abbott’s most consequential decisions in recent history, and we believe that others can learn from the principles we followed to arrive at and then execute on that choice. We started with candid, collaborative discussions that helped us reach a consensus. We anticipated disruption of the CGM market that we’d created and opted to disrupt ourselves before competitors could. We turned our focus to customers and listened deeply to their feedback and concerns. We found ways to eliminate complexity without sacrificing technical excellence. And, perhaps most important, we insisted on putting out a product that would have a broadly positive impact not just on our bottom line but on as many people with diabetes as possible.
Committed to Innovation
Abbott’s founder, too, wanted first and foremost to help people. In 1888 Wallace Abbott, a physician and proprietor of People’s Drug Store in Chicago, began making medicines from plants and herbs in formulations that he believed were more effective than previous remedies. Customers agreed, and six years later the enterprise was renamed the Abbott Alkaloidal Company.
By the early 20th century it had expanded to Europe and produced the first synthetic medicine: a breakthrough antiseptic used to treat wounded soldiers in World War I. It continued to grow as a public company, even through the Great Depression and World War II, pioneering vitamins, intravenous solutions, and more antiseptics and antibiotics. By the 1960s Abbott had also become a leader in the nutrition market through the acquisition of M&R Dietetics, the maker of Similac baby formula. By the 1970s we had expanded into diagnostics, with the introduction of blood chemistry analysis and hepatitis detection. And in 1985, amid the AIDS crisis, the company won approval for the first licensed test to identify HIV in blood.
This century has seen equally rapid development, change, and growth in our portfolio of products and technologies and in our operations, which now span more than 160 countries. Following several big launches—including that of Kaletra, for HIV, in 2000, and Humira, the first human monoclonal antibody drug, in 2002—Abbott decided in 2013 to spin off its proprietary pharmaceutical division into what is now a Fortune 100 company, AbbVie, while retaining its core medical devices, diagnostics, nutritional, and generic pharmaceuticals businesses. Over the past decade, in addition to launching FreeStyle Libre, we have introduced a new family of diagnostics and informatics systems and made two key acquisitions: Alere, for its leading point-of-care testing technology, and St. Jude Medical, to add cardiovascular and neuromodulation innovation and expertise. During the pandemic we were also able to quickly create and deploy multiple new Covid-19 tests, including the market-leading BinaxNOW.
I joined Abbott in 1996 as a manager of a diagnostics business unit and then worked my way up in various positions and divisions around the world. Over the past 28 years I’ve grown ever more committed to the company and its mission of doing work that enhances people’s lives. That’s why I found FreeStyle Navigator’s failure to gain traction so frustrating.
A Disappointing Launch
In 2008 I had been working in our diabetes care division for a decade. We knew that finger-stick glucose monitoring was a huge pain point (literally and figuratively) for people with the disease. In 2004 we had acquired a company—TheraSense—specifically for its wired enzyme technology, which we knew could revolutionize the process. We created a separate group within our unit to focus on building a device around it, from R&D to clinical trials and marketing. The group’s members were set off in their own silo and hailed as saviors. Expectations were high.
I was promoted to manage the commercial side of the diabetes business just as Navigator was being launched in the United States. As I’ve mentioned, the doctors and patients who gained access to it saw it as a vast improvement over previous systems. The readings were very accurate, and the device was indeed life-changing for some. But its design was clunky and the interface was unintuitive. Manufacturing was complicated and difficult to scale. And the high production costs resulted in a retail price of around $7,000 a year, which was rarely covered by insurers, making it prohibitively expensive for most people.
As a long-term manager in the business, with affection for our people and technology, I was at first hesitant to call out those issues. But I benefited from the perspective of my boss, the division president, who had come from a different area of the company and pushed us to confront the problem head on: Why was this technology with such great promise going nowhere?
We met as a management team to discuss the issue. One camp immediately suggested that we scrap Navigator and start again. Another worried that doing so would devastate the thousands of people who were content with it. Initially I was in the latter group. But as I listened to my colleagues make their cases, and I began to weigh the pros and cons of minor revisions versus total revamping, I realized the solution was clear. Although we had failed on our first try, the business growth and impact opportunities were still there. So we owed it to ourselves and to our customers to give it a second shot—and to get it right this time.
After about four months of meetings, we agreed on a plan and presented it to corporate leadership. We acknowledged our collective mistakes in developing Navigator. We explained what we wanted to do differently for version two and where we intended to take the design. We emphasized how much we still believed in our mission. And we got approval.
Our next task was communicating this shift to key opinion leaders in the industry and to our customers. At a call center outside Philadelphia we trained 70 or so team members on how to have the difficult conversation about discontinuation with the 3,000 or so people who were using the device (or their parents). We offered full refunds and suggested alternative systems, but people were still understandably upset. I listened in on some of those calls because I knew that hearing customers’ frustration would motivate me. We promised that we would come back with a better device. I had previously called my counterpart at our leading competitor to warn her that she should get her customer service team ready, because we were about to start referring our users to her product. But I also told her that we intended to reclaim those customers soon—and to win over many more.
Our Successful Second Try
The good news was that our technology was sound: We already had a sensor that could give us accurate glucose data from interstitial fluid in the arm. What we needed to fix was the product design, so we brought in people with that specific expertise to engage in deep customer and market research and to collaborate directly with our scientific and manufacturing teams. We then moved on to rapid prototyping: showing proposed models to people with diabetes, getting their feedback, working overnight on changes, and presenting new versions. We shrank the sensor to the size of a coin and designed it to be manufactured cost-effectively at scale. Our user-experience goal was to make the device “Fisher-Price friendly,” meaning as easy to “play” with as that company’s toys. As for cost, our goal was to charge no more than the equivalent of “a latte a day.”
Operating in this way, we reached huge milestones. I remember the day the project lead told us that his team had succeeded in increasing the longevity of the sensor from five to 14 days, essentially reducing our costs by two-thirds. Next he reported that they’d figured out how to bypass the onerous chore of users’ needing to calibrate the sensor each day; it could be done once at the factory. Soon we got word that the group working to streamline production had managed to fully automate the process. Every month, on a Friday, we’d meet with the division president from 8 AM to 5 or 6 PM for a full-day review of the project, including all the decisions that had been made and the intersectional ramifications of each.
Once FreeStyle Libre was ready, we had to set a price. In health care high margins are typically the reward for innovation that your competitors can’t match. Premium prices also suggest high value. But if our new device was to be accepted by people and insurers around the world, we would need to price it affordably. Competing CGM systems, like Navigator, were priced around $7,000 a year. We could have charged $3,000. Instead, after much internal debate, we settled on $1,000 to $1,200—high enough to yield a return on our years of investment but low enough to immediately accelerate adoption.
Our go-to-market strategy began in 2014 in Europe, and health care providers, typically governments, immediately picked up the new device. For them, an accurate, user-friendly, and affordable CGM was a no-brainer, and sales quickly cascaded from France to England to Germany to Italy. The U.S. market was more of a challenge because it involves so many intermediaries and gatekeepers: private and public insurers, physicians, and pharmacists, some of whom were already loyal to existing, higher-priced products. One payer even told us that our price was too low! However, we eventually began to make inroads—not least because we started marketing and selling directly to consumers and then helping them work through the insurance claim process. We built our own online shop and advertised in traditional media.
Soon we began to see the kind of uptake we’d dreamed of. Before 2014 only tens of thousands of people worldwide had CGM systems. By 2016, 250,000 people around the globe were using FreeStyle Libre.

Today that number is more than 6 million people in more than 60 countries, and as we continue to improve the device each year, we expect sales to double to $10 billion by 2028.
Lessons Learned
Our organization learned a great deal during the transition from FreeStyle Navigator to FreeStyle Libre—as did I. After leading the Libre launch from my senior position in the diabetes care group, I was tapped to manage our entire medical devices business, which also encompasses our cardiovascular and neuromodulation businesses. I then stepped up to be COO and later CEO; now I’m also chairman of the company. In each of these roles I’ve pushed our teams to focus on not just breakthrough innovation but also accessibility, affordability, and sustainability for long-term impact.
We start with strategic discipline: Where are you going to compete? And how will you do it? Abbott is a diversified company with positions in many segments of the health care market and many geographies; our portfolio varies according to local market needs. But for each business and for the organization as a whole, we constantly ask ourselves those key questions.
I also want us to keep disrupting ourselves, which means that some of our teams will be selling existing products and technologies to fund colleagues who are working on new offerings that will kill off the old ones. Employees may specialize, but leaders know they must manage ongoing operations and transformation in tandem and celebrate both sides equally. Across units and within them, our mantra is “All for one, one for all.” A big part of my job is to maintain this culture of collaboration while continuing to drive innovation. Yes, we applaud our accomplishments. But we also stay paranoid. We joke that we give one another high fours instead of high fives. There is always something to improve—or change.
Our successful CGM pivot could not have happened without a shift to more open, cross-functional teamwork and more consumer-led innovation. That’s how we eventually found a path to delivering a high-quality device that was also simple to use and extremely cost-effective.
The Navigator-to-Libre journey proved unequivocally that failure is a definitive state only if you let it be. If you have a big problem that needs to be addressed but your first solution is so-so, resist the urge to stick with what you’ve got. Try again from a different angle. We saw another case in point at Abbott when a new drug-delivery technology for stents to improve heart health yielded poor results in beta testing. We could have shelved it. But someone on the medical devices team observed that the innovation might instead be applied to another challenge: unblocking arteries below the knee. When the head of the medical devices unit presented the idea to me as the CEO, I saw myself back in 2010, with the diabetes care team, pitching the CGM switch. And my verdict was just like my predecessor’s: “I don’t know if this will work, but this team seems inspired, and I’m willing to bet on that passion.”
Because we’re pursuing innovation in the service of human health, we never stop. We have to keep pushing, evolving, and having the courage to disrupt ourselves. How do you do that with the most successful med-tech product in history? You see it as a platform and think even bigger. So we announced the creation of Lingo, a biowearable that helps healthy people stay in tune with their glucose levels, allowing them to improve their overall health and wellness and retrain their metabolism.
Abbott’s commitment to sharp strategy, continual disruption, deep teamwork, consumer connection, and relentless problem-solving is aimed at delivering the best and biggest impact we can. Yes, we want to create financially successful products and technologies. But the higher-level reward is that people all over the world tell us we’ve changed their lives.

https://hbr.org/2024/09/the-ceo-of-abbott-on-revamping-its-breakthrough-diabetes-device

Robert B. Ford is the CEO of Abbott Laboratories, a medical devices and health care company.

11/08/2024

India cannot fix its problems if it pretends they do not exist
The government’s response to bad news is to stick its fingers in its ears

Aug 8th, 2024
THE ECONOMIST

𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬

TWO SURPRISING results came out in India on June 4th. One was the conclusion of a six-week-long general election in which the ruling Bharatiya Janata Party (BJP) expected an easy victory on the back of its hugely popular leader, Narendra Modi, the prime minister. Exit polls forecast as many as 340 of 543 seats for the BJP. Instead, the party limped in with just 240 and formed a government only in coalition.
For a cohort of 2.3m Indians it was that day’s other result that was more important. A month earlier they had sat a national entrance test to compete for some 110,000 medical-college seats. Scores released on June 4th showed a surprising—and unprecedented—67 candidates with perfect grades, including six from just one testing centre.
What followed was no surprise at all. Allegations of corruption were flung about. The government denied that exam papers had leaked. The matter reached the Supreme Court, which ruled that there were leaks but they were not systemic. But not before an exasperated chief justice sighed, “Let us not be in self-denial because self-denial is only adding to the problem...Everyone knows there was a leak.”
Denial is the first, and often the only, response of India’s government to bad news. Last month analysts at Citigroup, a bank, noted that India would at best manage to create 9m of the 12m new jobs it needs annually to absorb new entrants to the workforce. Unemployment was in part responsible for the BJP’s electoral disappointment. But the government responded with the dubious claim that it had created 20m jobs on average every year between 2018 and 2022, a period that includes the covid-19 pandemic.
That pandemic, according to official figures, killed half a million Indians. The World Health Organisation (WHO) estimates the toll at ten times greater. (The Economist’s model puts it at between 2m and 9.4m.) The government dismissed the WHO, citing “questionable methodology”.
Mr Modi’s government has never seen a methodology it likes. Last year the Global Hunger Index, a measure of undernutrition, ranked India 111th out of 125 countries. The government said it had “serious methodological issues”. India ranks 176th of 180 countries on an environmental index. “Unscientific methods”. What about the World Bank’s human capital index, which measures health and education? “Major methodological weaknesses”. The World Press Freedom Index? “Methodology which is questionable”. The Freedom in the World Index, EIU Democracy Index and V-DEM indices? “Serious problems with the methodology”. Sometimes the government does not even like its own data. In 2019 it withheld the release of unflattering consumption numbers, promising fresh ones with “a refinement in the survey methodology”.
When there is no methodology to question, the government sometimes shoots the messenger. Several foreign journalists have been denied permission to work in India. Last year a BBC documentary about religious riots in Gujarat in 2002, when Mr Modi ran the state, was banned from the Indian internet. In July the government demanded that YouTube remove a documentary about Indian spies in Australia.
YouTube is increasingly in the cross-hairs. A recent survey found that as many Indians now rely on it for news as upon television and newspapers. YouTubers have emerged as a crucial source of opposing views in a landscape dominated by pro-BJP mainstream media, especially during the recent election. The BJP’s response is to tame them. A bill making its way through the legislative process would require content-creators to register with the government and imposes onerous compliance costs, carrying the threat of criminal liability. The intent is to drive independent voices offline or at least steer them away from topics of substance.
Yet India’s problems are real. Youth unemployment stands at 16%. Among fresh graduates it is 41%. An analysis of the government’s own data by the Hindustan Times, a national daily, found that just 56% of Indians eat three meals a day. Pretending that these problems do not exist will not make them go away.
It is also self-defeating for a party that likes winning elections. Had Mr Modi received better information, he might have run a more effective campaign that acknowledged widespread concerns. He has projected himself as an almost god-like figure, demanding fact-free loyalty. But as this year’s election shows, not everyone still keeps the faith.

https://www.economist.com/asia/2024/08/08/india-cannot-fix-its-problems-if-it-pretends-they-do-not-exist

10/08/2024

Why Warren Buffett has built a mighty cash mountain
Berkshire Hathaway’s boss is an impressive investor, not an economic oracle

Aug 8th 2024
THE ECONOMIST

𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬

No investor commands attention quite like Warren Buffett. As boss of Berkshire Hathaway, an investment firm that he has run for almost six decades, Mr Buffett’s every movement is scrutinised. When he shifts in his seat, investors large and small ponder what it might mean for their portfolios.
Results released by Berkshire Hathaway on August 3rd gave watchers more reason than normal to take note. The company announced that it had cut its stake in Apple by almost half, to $84bn. Its holdings of cash and Treasury bills increased from $189bn in the first quarter of the year to $277bn at the end of June. The backdrop to the announcement was dismal. Stockmarkets were in the midst of a sell-off, after weaker-than-expected data on American employment had provoked worries about the strength of the world’s largest economy.
Mr Buffett’s reputation has taken on an almost spiritual element: he is known as the “Oracle of Omaha” for a reason. The tens of thousands of investors who flock to Berkshire Hathaway’s shareholder meeting are more disciples than stockpickers. It is no surprise, then, that some onlookers see the cash accumulation as a dark omen. They note that Mr Buffett also accumulated cash in the mid-2000s, before the global financial crisis, leaving him in a strong position to buy when other investors’ balance-sheets were hammered. What does he know about the economy that they do not?
Less than they imagine. Mr Buffett’s extraordinary talent as an investor is not based on a capacity for seeing the future. Indeed, his outperformance is all the more impressive for his lack of supernatural abilities. In research published in 2018, Andrea Frazzini, David Kabiller and Lasse Pedersen, all of AQR Capital Management, a quantitative investment firm, found that Mr Buffett’s long-run outperformance can be straightforwardly explained. He has bought high-quality stocks at relatively cheap prices, and applied leverage judiciously. His strategy is, in short, classic “value investing”, albeit a form that is combined with the ability to borrow cheaply through Berkshire Hathaway’s insurance business.
Just as the explanation for his extraordinary performance is acumen rather than magic, so is the reason for Mr Buffett’s cash build-up. In May Mr Buffett said that his investors should expect him to sell shares and build up reserves for two reasons. One is that he expects taxes on capital gains to rise, and wants to realise his profits before that happens. The other is that he sees few cheap, high-quality companies in which to invest. The stockmarket is expensive across the board.
Berkshire Hathaway’s investments in Japan are an example of both the merits and the limits of Mr Buffett’s strategy. It appears unlikely that the firm would have sold the stakes it holds in five sogo shosha, cheaply valued trading houses, during the recent bout of market turmoil. In February Mr Buffett mentioned the investments as among those he expected to hold indefinitely. At the same time, he has promised his stakes in the companies will not exceed 10%, a figure his holdings already bump up against. Therefore options for expansion—either at home or abroad—remain scant.
Mr Buffett has never claimed to posses the foresight his followers attribute to him. Indeed, he once joked that any firm which hires an economist has one employee too many, and says he has never made any investment decision based on an economic prediction. Although Berkshire Hathaway emerged from the global financial crisis in better shape than the vast majority of its peers, the company’s cash holdings declined as a share of its total assets in the quarters running up to the collapse of Lehman Brothers in 2008—not the path an omniscient investor would have taken.
Mr Buffett’s new cash pile is undoubtedly enormous. Berkshire Hathaway could, if it wished, buy McDonald’s at the burger chain’s current share price and have $80bn left over, or take a stake in Meta larger than the one held by Mark Zuckerberg, the firm’s boss. If markets do enter a steeper downturn, Mr Buffett will be in an enviable position, able to snap up firms trading at discounts. Fans of Mr Buffett’s clear-headed approach to investing should nevertheless take him at his word. His simple maxims are at the root of his long and impressive performance as an investor; his growing cash pile holds no hidden explanation. The value investing Mr Buffett practises has become increasingly tough. In the absence of a much more protracted sell-off, it is likely to remain so.

https://www.economist.com/finance-and-economics/2024/08/08/why-warren-buffett-has-built-a-mighty-cash-mountain

10/08/2024

The Credibility Trap
Is Reputation Worth Fighting For?

By Keren Yarhi-Milo
July/August, 2024
FOREIGN AFFAIRS

𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬

Does a reputation for weakness invite aggression? Many analysts have suggested that Russian President Vladimir Putin decided to invade Ukraine in 2022 after inferring that the United States and the rest of NATO lacked resolve. The West had imposed only weak sanctions on the Kremlin in response to its 2014 annexation of Crimea and its 2018 poisoning of a former Russian spy in the United Kingdom. Then came the U.S. withdrawal from Afghanistan in 2021, a chaotic evacuation that seemed to demonstrate Washington’s lack of commitment.
On the day Russia invaded, U.S. President Joe Biden declared that Putin launched his attack to “test the resolve of the West.” Now, many believe that the United States must incur significant costs—sending billions of dollars in military aid to Ukraine and risking nuclear escalation—in part to prove to Putin that it is resolute. But the audience Washington is performing for goes well beyond Putin. Across the world, it can seem as if American credibility is constantly being questioned, with the United States’ adversaries challenging U.S. hegemony, and its allies worrying whether Washington will come to their aid. The potential for another Trump presidency and a more isolationist approach to foreign policy only adds to these allies’ concerns. In the Middle East, Israeli Prime Minister Benjamin Netanyahu has repeatedly scorned Washington’s requests for restraint in his assault on the Palestinian militant group Hamas after its terror attack on his country last year, while Iran’s proxies are brazenly attacking U.S. targets. In the global South, the United States is struggling to convince countries to take its side in the emerging struggle between democracies and autocracies. “Nobody seems to be afraid of us,” former Defense Secretary Robert Gates lamented in a February interview with Foreign Affairs.
Many analysts suggest that these developments are the United States’ fault—that it has lost its once unquestioned reputation for strength and resolve. Regaining that reputation depends on the extent to which the United States is willing to support friends such as Israel and Ukraine. The rest of the world is watching closely, and if Washington goes soft, the argument runs, adversaries will feel emboldened and allies abandoned. China, for instance, might infer that it can invade Taiwan without serious consequences.
Leaders have long obsessed over credibility, the perceived likelihood that a nation will follow through on its word, especially a threat to use military force. Washington has even gone to war—in Korea, Vietnam, and Iraq—to protect its credibility. Behind this consensus that credibility is important, however, lies a great deal of uncertainty about how it is established, how much it drives relations between states, and how it can be maintained or regained without instigating escalation or unwanted wars.
Over the past decade, a new wave of research has produced fresh insights into credibility, particularly about what creates a reputation for resolve. The latest thinking shows that all else being equal, maintaining a reputation for resolve is important to deter adversaries and reassure allies. But it also suggests that leaders have far less influence over their country’s credibility than they might wish. Credibility is in the eye of the beholder, after all. It depends on the complex psychological calculations of one’s adversaries. Reputations are beliefs about beliefs, which makes them almost impossible to control. The implication for the United States should give policymakers pause: its efforts to rebuild credibility are costly, easily misread, and can even backfire.
FACE OFF
The word “credibility” entered the international relations lexicon after the 1938 Munich agreement between fascist Italy, N**i Germany, France, and the United Kingdom, referring to what the leaders who appeased Hi**er lacked. Resolve—a state’s willingness to stand firm in a crisis—is only one component of credibility; material capabilities and perceived interests are also essential. But maintaining a reputation for resolve became much more central to American statecraft with the advent of the Cold War. Considering the United States’ new commitments at that time to defend distant allies, the global struggle between competing power blocs, and the existential risk of nuclear conflict, theorists such as Thomas Schelling contended that credibility was one of the key factors in deterring and prevailing against the Soviet Union. “Face is one of the few things worth fighting over,” he wrote in 1966.
Schelling, whose pioneering work shaped the rationalist thinking of many Cold War–era U.S. presidents, emphasized that a state’s response to any given crisis would prove relevant in future crises, even very different kinds of crises, because adversaries would presume that the state would behave similarly. This hypothesis suggested that deterrence depended on sending clear messages to adversaries and sticking to prior commitments. And it helped motivate the United States’ containment policies during the Cold War, leading to a focus on peripheral regions such as Indochina. Although the United States had few direct interests in Vietnam, Presidents John F. Kennedy and Lyndon Johnson felt that the United States’ reputation for resolve was being tested, and so they were steadily drawn into a war to defend South Vietnam from the communist north.
After the Cold War, a second wave of scholars questioned whether a state’s reputation for resolve mattered at all. Because most international relations dilemmas incorporate new considerations and unique sets of stakes, Daryl Press has argued that, when predicting a state’s future actions, analyzing its “current calculus” of interests and capabilities is far more useful than scrutinizing its past behavior. Jonathan Mercer has argued that reputations for resolve are hard to build. Moreover, they are subjective: leaders are more likely to believe their adversaries are resolute and their allies are weak-willed.
This post–Cold War school of thought contended that because states judge other states’ reputations subjectively and reputation does not appear to predict current behavior, reputation may not be worth fighting for. This view became more influential among U.S. policymakers over the course of the United States’ long wars in Afghanistan and Iraq, as some began to question whether Washington was mainly staying the course for reputation’s sake—and if it was really gaining anything by the effort to sustain its reputation for resolve. President Barack Obama defended his decision not to attack Syria after Bashar al-Assad’s regime used chemical weapons in 2013, crossing a redline he himself had set, by saying in 2016, “Dropping bombs on someone to prove that you’re willing to drop bombs on someone is just about the worst reason to use force.”
THE SCIENCE OF RESOLVE
Over the last decade, a new generation of scholars has employed fresh statistical methods, textual analyses of newly declassified government records, and survey-based experiments to bring an even more nuanced examination to how reputation shapes international relations, charting a middle path between those who think credibility is the be-all and end-all in foreign affairs and those who think it does not matter. All else being equal, it is becoming clearer that if a state has a reputation for resolve, that does change its adversaries’ behavior. For example, Alex Weisiger and I found in a 2015 study that countries that had backed down in a crisis were more than twice as likely to face challenges the following year than countries that had stood firm.
Yet signaling resolve can be harder than it seems. Repeated demonstrations of resolve can become rote over time and lose their force—or even be counterproductive. The United States prosecuted the Vietnam War in part to show its resolve to contain communism. But by making subsequent presidents wary of entangling Washington in far-flung conflicts, the war may have dampened that resolve and made future interventions much less likely—an aversion that came to be known as “Vietnam syndrome.”
Van Jackson’s research has also demonstrated that because a state’s commitments are multifaceted, an effort to prove one form of determination may weaken a reputation for other kinds. For instance, North Korea’s frequent threats over the course of its crises with the United States helped it establish a reputation for resolve. But when it failed to follow through, the same threats gave it a reputation for inconsistency and dishonesty. In seeking to show toughness, North Korea proved its fickleness.
Signaling resolve can be harder than it seems.
The greatest paradox the new wave of research identified, however, is that a state’s reputation is not in its own hands. Reputations depend on who is assessing them. My own research has found that leaders display selective attention, giving information that stands out to them—such as their personal impressions of their counterparts—greater weight than other indicators that may be equally or more relevant. In a similar 2022 study, Don Casler also found that policymakers adjudicate credibility differently depending on their experiences and roles. Intelligence and military officials, for instance, tend to focus on a state’s current capabilities, whereas diplomats focus more on the consistency (or lack thereof) of its leaders’ behavior.
Beliefs matter, too. The recent scholarship on credibility suggests that one actor’s assessment of another is profoundly shaped by irrational forces such as confirmation bias, motivated reasoning, and ideological predisposition. For instance, a 2018 study by Joshua Kertzer, Jonathan Renshon, and I found that hawkish policymakers perceive public threats as less credible than their dovish counterparts do and are more inclined to view actions such as military mobilizations as credible signals of resolve. A similar study by Kertzer, Brian Rathbun, and Nina Srinivasan Rathbun found that hawks are more likely than doves to view their adversaries’ promises to comply with agreements as lacking credibility, suggesting that existing beliefs color assessments. As former Secretary of State Mike Pompeo said of the Iranians as Trump prepared to withdraw from Obama’s nuclear deal, “We know they’re cheating. . . . We’re just not seeing it.”
Or consider the United States’ pullout from Afghanistan in 2021. Those who cared about the overall reputation of the United States might have concluded that the withdrawal and its chaotic ex*****on showed adversaries that the country lacks resolve. But those more concerned about the consistency of its promises and its actions—maintaining what is known as a strong “signaling reputation”—would say the withdrawal revealed high credibility. Biden, after all, followed through on a campaign promise to pull U.S. forces out of Afghanistan, signaling that he keeps his word.
Adding to the complexity, observers do not judge resolve based only on what a leader does; they also judge it based on what they think the leader thinks about what he does. In 1969, after North Korea shot down a U.S. reconnaissance aircraft, killing 31 Americans, the United States chose not to retaliate. U.S. Secretary of State William Rogers attempted to frame this nonresponse as a sign of American strength: “The weak can be rash. The powerful must be more restrained.” If observers thought Rogers truly meant what he said, then the decision not to retaliate could have bolstered the United States’ reputation for resolve. But if observers believed Rogers was trying to dress up weakness with powerful rhetoric, or that the United States had chosen not to retaliate purely to send a signal about its reputation, they may have discounted the statement entirely. This is what the scholar Robert Jervis called “the reputation paradox.” Ultimately, how people calculate someone’s intentions reflects their own biases.
SIGNAL OR NOISE?
Debates about credibility, or more specifically reputations for resolve, are now playing a major role in the latest outbreak of violence in the Middle East. One reading of that conflict suggests that the decline of American credibility in the region—thanks to the bungled Iraq war, the failure to follow through on the redline with Syria, and the rushed withdrawal from Afghanistan—directly contributed to a credibility deficit that may have emboldened Iran and its proxies, including Hamas. A converse theory suggests that Iran and its proxies rated U.S. credibility highly and hoped that if they attacked a U.S. ally, Washington would be forced to respond and get dragged into a costly war.
These narratives may have elements of truth. But they assume qualities about the United States’ adversaries that are almost impossible to know, such as which dots Iranian or Hamas leaders connected to form their assessments of U.S. resolve. After Israel scored a decisive win in its 2006 war with Hezbollah, the Lebanese militia’s leader, Hassan Nasrallah, acknowledged that had he known Israel would respond with so much force, he would never have kidnapped the two Israeli soldiers whose capture triggered the war. It is unlikely the leaders of Hamas or Iran will make a similar declaration—and if they did, it might not accurately reflect whether the United States’ credibility deficit factored into their calculus. Even if these leaders plainly and publicly declared how their perception of U.S. resolve influenced their decision-making, such statements may be merely performative. Policymakers must apply great caution when concluding, first, that they understand how adversaries perceive their country and, second, that this perception clearly motivated a certain action.
In fact, Hamas’s October 7 attack may have had nothing to do with Washington’s reputation. It could simply be explained by the failure of Israeli deterrence attributable to local factors such as the prospect of an Israeli-Saudi normalization deal and turmoil in Israel’s domestic politics. Likewise, Putin’s decision to invade Ukraine may have had everything to do with his psychology—his megalomania, his aspiration to restore Russia’s lost grandeur. By blaming so much global disorder on a U.S. credibility gap, analysts can easily overstate Washington’s ability to shape world events.
The American credibility deficit is also frequently invoked to account for China’s growing belligerence. A common argument is that a U.S. failure to support Ukraine will signal to Chinese leader Xi Jinping that the United States’ commitment to supporting smaller allies is fundamentally softening, thus making China’s invasion of Taiwan more likely. But only Xi fully knows how much the war in Ukraine factors into his calculations. Actions don’t always speak for themselves, as Jervis has noted.
REPUTATIONAL RISKS
It is essential for U.S. leaders to avoid being trapped by their anxieties about credibility. In the end, it matters little how the United States assesses its own reputation for resolve. What matters far more is how observers—its adversaries and allies—judge it, which is hard for the United States to control. The current obsession with fixing the United States’ credibility deficit may not only be fruitless; it also carries substantial risk. If Americans come to the consensus that a credibility crisis is to blame for the world’s disorder, they are likely to conclude that their opponents will be more willing to challenge U.S. interests, which invites more hawkish U.S. policy and costlier signaling. This signaling, in turn, could provoke unnecessary crises, arms races, and even wars.
Of course, Washington must make its threats as credible as possible, reassure its allies, and demonstrate that contested areas—such as Israel, Taiwan, and Ukraine—are of vital concern. But states and leaders have a wider menu of options to build credibility than some policymakers recognize: public methods, private methods, and a combination of the two. Sending military aid or moving aircraft carriers can signal resolve. So can taking steps to avoid undermining American credibility, such as not publicly broadcasting the United States’ intent to “pivot” away from a region or publicly delineating redlines it will be unwilling to enforce. In general, those who suggest the United States faces a credibility deficit tend to put far too much emphasis on the country’s past actions. The past matters, but what matters more is the credibility of the signals Washington is sending right now.
It is essential for U.S. leaders to avoid becoming trapped by their anxieties about credibility.
U.S. policymakers also sometimes excessively globalize credibility by presuming that every country around the world perceives the United States’ actions in the same way and takes a single message from U.S. foreign policy, even policies the United States has applied in a completely different region. In truth, the vantage points from which other countries form their perceptions of the United States vary widely, depending on those countries’ local situations and their leaders’ psychologies. Policymakers must carefully analyze the psychologies of the United States’ diverse adversaries—otherwise, even costly signaling may not have the desired effect. There is no one-size-fits-all approach to signaling resolve or maintaining deterrence.
Adversaries may not even pay the most attention to what the United States does overseas. They may more closely follow its domestic politics. More than any action the United States did or did not undertake abroad, it may well have been American political polarization that most encouraged Putin to test Washington’s resolve to defend Kyiv. Recent research suggests that when presidents show resolve in domestic crises, they can build their reputations internationally. Soviet leaders’ opinion of President Ronald Reagan’s resolve was bolstered by a domestic act—his firing of air traffic controllers for going on strike in 1981. Soviet leader Nikita Khrushchev wrote in his memoirs that he was impressed by Kennedy’s resolve to seek a negotiated settlement to the 1962 Cuban missile crisis. But what impressed him was not how the president behaved toward Moscow but his willingness to overrule the advice of his own military leaders to avert a catastrophe.
A reputation for resolve is one of the hardest things for leaders or states to control. Any assessment of U.S. adversaries that does not carefully examine their psychology—the different ways they come to conclusions about the United States—is doomed to be inadequate. And ultimately, to regain credibility abroad, the United States may first need to tackle an even more complicated task: restoring unity at home.

https://www.foreignaffairs.com/united-states/credibility-trap-reputation-yarhi-milo

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Opinion Across The Guardian
Opinion Across The Guardian

When will Israel free the Palestinians it is holding hostage? By Arwa Mahdawi Aug 03, 2024 THE GUARDIAN 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 If you want to understand the complicated situation in the Middle East, you need to start with two basic sets of facts, which are the foundation for everything else. The first is that Israelis are civilized people, just like westerners. You should believe whatever the Israeli government says, because they are obviously not going to lie. If an Israeli soldier or settler commits a terrible act, they’re not considered a reflection on the state as a whole; they’re a bad apple who will be held accountable. Even if the data shows they are rarely held accountable. The bottom line: Israelis are good people who want peace; any violence they commit is justified because they have an absolute right to self-defense. Palestinians, meanwhile, and Arabs more generally, are seen as barbarians. Barely human. Not even mammals: more like wasps, caterpillars and spiders – to borrow an analogy from the celebrated New York Times columnist Thomas Friedman. You can’t trust a word they say. If a Palestinian does something terrible they are not a “bad apple”, they’re an example of how all Palestinians are rotten to the core. One shouldn’t think of any Palestinian as an innocent civilian – they are all terrorists, even the children. The bottom line: Palestinians are bad people who want war; nothing they do can be justified because they have no right to self-defense. Far-right extremists in Israel’s government, along with a number of US politicians, are honest about their prejudices; happy to talk in these blunt terms. More respectable politicians and journalists, meanwhile, generally don’t say the quiet part out loud. Still, behind a lofty insistence on objectivity, these unde

Red Alert
Red Alert

America is not ready for a major war, says a bipartisan commission The country is unaware of the dangers ahead and of the costs to prepare for them July 29, 2024 THE ECONOMIST 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 GENERAL CHARLES “CQ” BROWN, the chairman of the joint chiefs of staff, America’s top military officer, recently told the Aspen Security Forum, a gathering of the country’s foreign-policy elite, that the nation’s armed forces were the “most lethal, most respected combat force in the world”. Steely-faced, and to jubilant whoops, he declared: “I do not play for second place.” In truth, America’s military position is eroding. That is the message of a report published on July 29th by a bipartisan commission entrusted by Congress with scrutinising the Biden administration’s National Defence Strategy, a document published two years ago. The commission was chaired by Jane Harman, a former Democratic congresswoman, with Eric Edelman, an undersecretary of defence in the George W. Bush administration, deputising. In 2018 the previous such commission had warned that America “might struggle to win, or perhaps lose, a war against China or Russia”. This time the language is starker. The threats to America, including “the potential for near-term major war”, are the most serious since 1945, the commission says. The country is both unaware of their extent and unprepared to meet them. The most serious problem is China. “We’re at least checkmating China now,” boasted Joe Biden, America’s president, on July 6th. In reality, China is “outpacing” America not only in the size but also in the “capability” of its military forces, as well as in defence production, and the country is probably on track to meet its target of being able to invade Taiwan by 2027, argues the commission.

Less Nimitz, More MacArthur
Less Nimitz, More MacArthur

America recreates a warfighting command in Japan The threat from China hastens the biggest military transformation in the Pacific in decades July 27, 2024 THE ECONOMIST 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 KADENA AIR BASE in Japan, America’s largest in the Pacific, is roughly 650km from the coast of China as the missile flies. Jets roar constantly over children’s playgrounds on their way to and from patrols. But American forces there have, in effect, been on a peacetime footing since the end of the Vietnam war. That changed on July 28th, when Lloyd Austin, America’s defence secretary, announced the creation of a new warfighting command to oversee all American forces in Japan. The “historic” shift, as Mr Austin calls it, is a sign of the alarm with which America and Japan regard the threat from China, which is rapidly building up its armed forces. The aim of the new headquarters is both to strengthen the defence of Japan—once a rear base for operations but increasingly likely to be on the front line of any conflict with China—and to mirror Japan’s plans to create an American-style joint command to fuse air, sea, land and other forces early next year. “This is finally the transformation of US-Japan relations from what used to be mainly a basing agreement to project US military power into a true military alliance,” argues Christopher Johnstone of the Centre for Strategic and International Studies, a think-tank in Washington, DC. The move may deepen China’s worries about encirclement and intensify complaints that America is trying to build an “Asian NATO”. That is a long way from reality. America’s allies in Asia have no mutual obligation to defend each other, as do members of NATO. Right now US Forces Japan (USFJ) is mainly an administrative headquarters for units based in the country

WHY I Did So
WHY I Did So

I Woke Up at 5 AM for Doing NOTHING; WHY I Did So & How It Helped Me By Renuka Gavrani Oct 18, 2022 MEDIUM 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 We are always busy. One task after another. One email after another. One video after another. One thought after another. The cycle never ends. We never take a pause to reflect on who we are becoming, what we are losing, what we are thinking, or what is our thought process. The problem is our world is getting smaller. And we are so connected to the outside world that the inner connection is lost and considered irrelevant. As a result, we end up following, doing, thinking, and becoming what the outside world suggests to us. I am one of those people who never knew how to take my decisions independently. If you present two options before me, I will keep thinking about which one to choose until my last breath. Since childhood, I always needed others’ opinions about what’s good for me, what I should do in my life, what I should wear, and things like that. Or maybe I was always told what to do that I never realized God has luckily blessed me with a brain as well that I can use to analyze ‘what’s good for me’ I was so dependent on others that when I was in college, I used to wish for someone to tell me ‘what’s my passion.’ In fact, I have searched on YouTube as well ‘how to find your passion’ But in the past 2 years, I have transformed. I have discovered my passion and I have gone through so many challenges alone that my younger version feels proud of me. What I realized in these 2 years is that ‘I was always enough to do things on my own, take decisions independently, and think critically without needing suggestions or opinions from friends, family, or YouTubers’ The problem, however, is since we are so open to information, we are losing our mental c

Imran Khan’s jail interview on The Sunday Times
Imran Khan’s jail interview on The Sunday Times

Imran Khan’s jail interview: ‘I’m locked in a death cell for terrorists’ By Christina Lamb July 21, 2024 THE SUNDAY TIMES 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 Pakistan’s jailed former prime minister Imran Khan has said he is being caged like a terrorist, in a rare interview from behind bars. “I am confined in a 7ft by 8ft death cell, typically reserved for terrorists to ensure they have no contact with anyone,” he told The Sunday Times. “It is solitary confinement with barely any space to move. I am under constant surveillance by the agencies, being recorded 24/7, and I am denied basic prisoner and human rights such as visitation,” he said. The former cricket star, 71, has been in a maximum-security prison for almost a year, convicted on three charges — corruption for allegedly selling state gifts; treason for leaking state documents; and illegal and un-Islamic marriage. His third wife, Bushra, is also in jail. His first wife was Jemima Goldsmith, with whom he has two sons. The interview was conducted via Khan’s lawyers because he is not allowed pencil and paper. This month a UN working group on human rights declared his incarceration arbitrary and in violation of international law, demanding his immediate release. Recent judgments in Pakistan have ruled in his favour. In June, the so-called Cipher Case — for leaking state secrets — was overturned, as was, on July 13, his convictions for illegal marriage and for selling state gifts such as jewellery from the Saudi crown prince. Khan was, however, denied bail by a Lahore court over accusations that he had incited his supporters to riot in May last year after being pushed from power. Protesters stormed the home of the local army commander and stole white peacocks from his garden. The government is threatening to ban his party, Pakist

Pieds-à-lune
Pieds-à-lune

Astronomers have found a cave on the moon Such structures could serve as habitats for future astronauts July 17, 2024 THE ECONOMIST 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 From an estate agent’s perspective, the lunar surface has little to recommend it. Its none-too-metaphorical lack of atmosphere means it is bombarded by meteorites, cosmic radiation is unrelentingly harsh and temperatures range from lows of -246°C to highs of 121°C. Subsurface lunar caves, on the other hand, with stable temperatures and cover from projectiles, would be much more enticing habitats. The only question is, do any exist? In a paper published in Nature Astronomy, Lorenzo Bruzzone and Leonardo Carrer, at the University of Trento, and their colleagues, offer a definitively affirmative answer. They provide evidence of a cave about 80 metres long and 45 metres wide at the bottom of a 135-metre-deep pit in the Sea of Tranquility. The neighbourhood is a historic one: plains which surround the pit are the site of humanity’s first lunar landing. Though the site’s selenological (the lunar equivalent of geological) origins are unclear, it may be the remains of a subsurface tube forged by a river of lava. When the tube’s ceiling caved in—perhaps after a meteor impact—a giant pit (with its associated caves) was all that survived. The researchers discovered the annexe by analysing data from the Lunar Reconnaissance Orbiter (LRO), an uncrewed spacecraft which has been orbiting the Moon since 2009. Aboard the LRO was a radar instrument primarily designed to hunt for water ice under the Moon’s surface. The instrument also collected data about the shape of pits such as the one in the Sea of Tranquility. Although the images it created have been available since it broke down in 2011, says Dr Bruzzone, nobody had previously looked at the

To ban or not to ban
To ban or not to ban

Imran Khan comes under further pressure in Pakistan The government and the generals who back it want to outlaw his party July 18, 2024 THE ECONOMIST 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 It is the oldest trope in Pakistani politics. On July 15th the government declared that Pakistan Tehreek-e-Insaf (PTI), the party of Imran Khan, a popular former prime minister who is currently in jail, is involved in “anti-state activities”. The allegations? That the PTI sabotaged negotiations with the International Monetary Fund (IMF) and hired an American lobbying firm. For good measure the government is also initiating high-treason proceedings against Mr Khan, a crime that attracts the death penalty. “Imran Khan and Pakistan cannot go together,” said Attaullah Tarar, the information minister. The harassment of the opposition suggests that the minority government of Shehbaz Sharif, the prime minister, is feeling the heat. On July 12th the Supreme Court returned the PTI to Parliament: the party had been barred from contesting the general election in February, forcing its candidates to run as independents. The Supreme Court also declared that the PTI is eligible for a share of parliamentary seats reserved for women and non-Muslims. This means that Mr Khan’s party looks set to become the largest in Parliament. More damagingly for Mr Sharif, his hopes of assembling a two-thirds majority, and with it the power to amend the constitution, appear to be over. This judicial setback for the government comes alongside other bad news. On July 13th Mr Khan was acquitted in an unlawful-marriage case, one of the three convictions for which he was sentenced to a combined 34 years earlier this year. (Mr Khan looks set to face new charges of graft.) In his press conference Mr Tarar claimed that Mr Khan and his party got “undue rel

Avian influenza
Avian influenza

Millions of birds have died. How to stop humans dying, too As isolated human cases of H5N1 emerge, now is the time to prepare July 17, 2024 THE ECONOMIST 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 Over the past couple of years the largest outbreak of avian influenza (h5n1) in recorded history has torn across the planet. The virus, which is deadly to birds, has devastated wild and domesticated flocks alike. Attempts to stop transmission have seen hundreds of millions of birds culled on farms since the strain was first identified in 1996. Wild bird deaths are probably in their millions at least. The danger is that, as the virus mutates, a bird pandemic becomes a human one. Precisely how h5n1 will adapt and spread is impossible to predict. But the time to prepare is now. Over the past year the virus has spread in a range of mammals, and it is now rife among dairy cattle in America. This has led to several confirmed infections in farm workers. So far, these have been mild and isolated. However, many more cases in cows and people are thought to be going undetected, because of gaps in surveillance. For now there are no known cases of the virus being passed from one person to another. Nor is there evidence of airborne transmission from dairy cattle to humans. But that is no cause for complacency. Each infection is a chance for new mutations to arise. Scientists have found the virus has acquired many adaptations, including some that may help it spread more easily. There is a risk that it could become a highly dangerous airborne human pathogen. Don’t be flustered, don’t be scared. Be prepared In many respects the world is better prepared for an influenza pandemic than it was in 2020 when covid-19 began to spread. It is not starting from scratch. Influenza viruses frequently circulate among humans, providing some degree

The bull’s big blind spot
The bull’s big blind spot

Euphoric markets are ignoring growing political risks Investors’ exuberance in the face of political ructions is unlikely to pay off July 18, 2024 THE ECONOMIST 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 The past year has brought war to the Middle East, escalation of the trade conflict between the West and China and, on July 13th, an attempt to kill the frontrunner in America’s presidential race. But if you look at financial markets, you’d think nothing was amiss. No amount of blood or political rancour, it seems, can distract Wall Street from the good economic news: that fears of recessions have so far proved wrong, and that inflation has nonetheless tumbled. As a result markets are at, or close to, all-time highs in America, the euro zone and Japan, and many emerging-economy stocks are booming, too. Optimism is rife. Compared with companies’ profits, America’s stocks have only ever been this pricey during two previous booms. It may be that the attempt on Donald Trump’s life was a random act without profound implications. America has a long history of attacks on politicians; neither the two attempts on Gerald Ford’s life in 1975 nor the one on Ronald Reagan’s in 1981 brought on crises. Yet the fact that it is easy to imagine partisan loathing inspiring an assassination attempt is a reminder of America’s political dysfunction, which is spilling over into global disorder. And if Mr Trump and his young running-mate, J.D. Vance, ride on a wave of solidarity to the White House, there will be another round of disruption. As his speech at the Republican convention showed, Mr Vance amplifies, more eloquently, Mr Trump’s isolationist instincts. Europe could face at once the loss of its NATO security umbrella and the economic pain of more American protectionism. Why are investors unperturbed by these th

Pension Nationalism
Pension Nationalism

The dangerous rise of pension nationalism Pursuing domestic investment at the expense of returns is reckless July 11, 2024 THE ECONOMIST 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 Rachel reeves, Britain’s new chancellor, says that she has inherited the worst fiscal circumstances since the second world war. An exaggeration, perhaps, but only a small one. To address the squeeze, Ms Reeves will seek the help of Britain’s retirement savings. On July 8th she said that she wants the country’s pension funds “to drive investment in homegrown businesses and deliver greater returns to pension savers”. Details of Ms Reeves’s plans are still to emerge. Her predecessor, Jeremy Hunt, set the ball rolling by mandating that defined-contribution pension funds will have to disclose the scale of domestic investments by 2027. Other countries are joining in. Stephen Poloz, a former governor of the Bank of Canada, is looking at how to increase pension-fund investment in domestic assets on behalf of the Canadian government. Enrico Letta, a former Italian prime minister, recently argued in favour of an EU-wide auto-enrolment pension scheme that could be funnelled into green transport and energy infrastructure. What explains the rise of pension-fund nationalism? Many Western countries, other than America, face similar problems. Politicians fret about low levels of business investment. The most promising high-tech firms flee for Silicon Valley when seeking venture-capital funding or Wall Street when requiring a stockmarket on which to list. High interest rates and mighty government debts mean that cash is scarce. Time, then, to shake down pension funds. There may be some measures that pension-fund nationalists are able to employ without dampening returns. Removing barriers that prevent funds from investing in domestic assets is

Putin’s New War Economy
Putin’s New War Economy

Why Soviet-Style Military Spending—and State Intervention—Won’t Save Russia By Andrei Kolesnikov July 10, 2024 FOREIGN AFFAIRS 𝘚𝘢𝘷𝘦 𝘵𝘪𝘮𝘦 𝘣𝘺 𝘭𝘪𝘴𝘵𝘦𝘯𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘢𝘳𝘵𝘪𝘤𝘭𝘦 𝘢𝘴 𝘺𝘰𝘶 𝘮𝘶𝘭𝘵𝘪𝘵𝘢𝘴𝘬 In Russia, the tradition of making fun of Soviet economic planning is almost as old as attempts to improve the economic system. “What would happen if socialism were built in the Sahara?” an old joke asks. The answer: “At first, except for plans, there will be nothing. Then there will be sand shortages.” According to another—one that former U.S. Federal Reserve Chair Alan Greenspan liked very much—in the Brezhnev era, a group of people are walking in a military parade in Moscow’s Red Square, except that they are wearing baggy formal suits instead of military uniforms. An aide runs up to the Soviet leader: “Leonid Ilyich, we don’t know who these people are!” Brezhnev replies: “Calm down, comrade, these are our most destructive weapons—Soviet economists.” After more than two years and six months of Russia’s “special military operation” in Ukraine, Russian President Vladimir Putin appears to be undeterred by the reputation of his country’s economic planners. The most striking outcome of his government reshuffle this spring was undoubtedly his replacement of longtime defense minister Sergei Shoigu with Andrei Belousov—a state economist with no military experience. A man not in a baggy suit but in an expensive and well-fitting one, Belousov previously served as minister of economic development, assistant to the president for economics, and vice prime minister. But there is a reason for his appointment: Russia’s military spending has now reached such gargantuan proportions—according to some estimates, nearly one-third of the 2024 budget is devoted to defense, reaching a higher portion of GDP than any other ye

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