French Lessons

RW goes cosmopolitan with thoughts on China, France, Japan, and Tesla. RW reads on academics investing green billions, European human capital, milk, new cities, aging, and failures in healthcare

It’s Bastille Day! Which is a total coincidence, but since coming up with titles is hard, I’m leaning into it.

Random Walk thinks:

• Breaking up with China is not(?) hard to do

• French lessons (in incentives)

• Tesla’s energy ambitions

• Japanese babymaking (reprise)

Random Walk reads:

• The academic directing billions in government green subsidies

• A story of European Human Capital (and decline)

• Milk (milk is everywhere, and not a drop to drink)

• Kill the old cities so that new cities may live

• If we live forever, we don’t need babies

• Failures in healthcare ventures

Grab your baguettes and storm the nearest armory, because you’re French. Why else have such a ridiculous accent?

Breaking up (with China) is not(?) hard to do

Mexican exports to the U.S. have matched China’s for the first time since China joined the WTO 20+ years ago:

RW isn’t convinced that this is entirely a decoupling story (primarily), so much as a China-is-slllowwwing-dowwn story. The Chinese grand reopening continues to disappoint, and Chinese goods inflation is (amazingly) hovering at ~0%:

New homes are languishing:

Retail sails are flagging:

And, travel, especially tourism, is still weak:

China is slowing down (primarily) because of an aging and shrinking population. Having fewer “prime age” people is both a “worker shortage” (i.e. higher prices) and a “consumer shortage,” (lower/different demand) and the effects on growth are profound.

In other words, China is providing a helpful glimpse into our future (although yes, there are obviously many reasons that we’re different than China).

China has, however, made a very big bet on our bet on EVs:

Our clean subsidies are their lifeline. Good thing nothing bad ever happens to the EV market:

The market appears to be distinguishing between subsidized EVs and unsubsidized ones.¹ It’s almost like without the subsidies, consumers might not be buying EVs at all.

French lessons

In the 1970s, France started requiring an architect for all new homes greater than 170m^2. Rather mysteriously, houses immediately started shrinking:

Similarly, French labor regulations kick in for firms with 50+ employees. 50 was an odd choice, because it turns out that French firms rarely need more than 50 employees . . . when they reach 48, it seems to be enough:

H/T

Don't Worry About the Vase

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Apropos of timeless, enduring observations, it turns out that incentives matter a lot to outcomes (and likely a lot more than intentions matter to outcomes).

Tesla energy traders

In a footnote, RW pondered Tesla’s decision to open up its fast-charging network to a broader audience: