2026-08-12 ATS briefing¶

The AI Growth Paradox¶

The $40 trillion figure is doing double work in Rogoff’s piece, and he knows it. It is both the ostensible problem — an unsustainable debt trajectory — and the excuse for the magical thinking he wants to dismantle. The AI boom, the argument runs, will generate such growth that the debt dissolves into higher tax revenues. Rogoff’s counter is not that AI won’t deliver productivity gains, but that the fiscal politics of anticipation will eat the surplus before it exists. Tax cuts and spending hikes will get out in front of the boom, and the boom may never fully materialise. The contradiction is concrete: the state must borrow to fund the AI build-out, but the build-out itself pushes up interest rates, making the borrowing more expensive. Capital is being crowded out by its own future promise.

The deeper point is about the 2010s orthodoxy of secular stagnation. Low interest rates were treated as a structural fact rather than a contingent one, and debt was therefore free. Rogoff’s history is useful here: rates were low in the Depression too, until they weren’t, and the postwar period required heavy financial repression to keep them down. The ten-year inflation-indexed Treasury yield averaging near zero from 2012 to 2021 was not a law of nature. It was a decade. Now it sits above 2.4 percent, and debt is far higher relative to income than it was the last time rates were at this level. The asymmetry is the real story: rates can adjust quickly, debt ratios cannot.

For all his Keynesian framing, Rogoff is describing a classic overaccumulation dynamic. The AI build-out is absorbing capital at a scale that raises the cost of capital for everything else, including the state that is financing it. The question is whether the productivity gains arrive fast enough to validate the borrowing. If they do not, the crash is not a matter of insolvency — rich countries rarely default because they cannot pay — but of confidence. Investors have already begun to notice that neither party will touch deficits while in office. That is the fuse.

Excess Savings Are Driving the New China Shock¶

Source: Project Syndicate

The first China shock was about labour mobilisation; this one is about capital that cannot find a home. Gros’s framing is useful precisely because it shifts the debate away from the familiar complaint about Chinese subsidies or currency manipulation and toward the internal logic of accumulation. The property collapse did not just dent growth; it removed the principal domestic sink for a saving rate that remains structurally high. With investment opportunities shrinking faster than income, the surplus has to go somewhere, and net exports are the residual.

The interesting wrinkle is that this is not a repeat of the 2000s, when China’s export machine was powered by cheap labour and foreign capital. Now the surplus is generated domestically, by firms that have upgraded technologically and no longer need the West as a source of know-how or equipment. That makes the shock harder to absorb politically in the importing countries: the usual remedy of pressuring Beijing to revalue or open its markets does little when the problem is a savings-investment imbalance, not an exchange-rate distortion. Tariffs, likewise, would simply redirect the surplus to other markets or into financial assets, as the build-up of Chinese holdings in global bond markets already suggests.

Gros’s point about absorption is the crux. A country that saves more than it invests must either consume the difference or export it. China’s leadership has tried to boost consumption, but the structural obstacles — household income share, social-security gaps, the legacy of the one-child policy — are not amenable to quick policy fixes. The surplus is therefore likely to persist, and with it the political friction. For the importing economies, the uncomfortable implication is that the China shock is not a temporary dislocation but a structural feature of the current configuration of global accumulation. The question is not whether China will export less, but whether the West can find a way to absorb the surplus without resorting to protectionist measures that would only deepen the impasse.

Dude, Where’s My Recession?¶

Source: Project Syndicate

The Fed’s own estimate of potential growth is doing a lot of work in Eichengreen’s piece, and it deserves scrutiny. If the US economy is growing at 2.1% and 1.5% while absorbing shocks that would have cratered any previous cycle, the question isn’t whether the economy is resilient — it’s whether the measure of "potential" has been quietly recalibrated to whatever the economy happens to be doing. A potential growth rate that moves to accommodate reality is not an analytical benchmark; it is a tautology dressed as one.

Eichengreen gestures at the real story — debt-financed speculation and geopolitical tension — but treats them as external risks rather than constitutive features. The appearance of resilience is not a mystery to be solved but a function of how growth is now manufactured. When expansion is driven by asset-price inflation and credit creation rather than productive investment, the economy can indeed shrug off bad news, because the news no longer has to be good for the balance sheet to improve. The 2% figure flatters a system that is growing on paper while the underlying conditions for that growth — cheap credit, speculative froth, imperial overstretch — are precisely what make it fragile.

The genuine contradiction is that the Fed’s own policy framework depends on believing its own estimate. If potential growth is actually lower, then current output is above trend, and the inflation that should have arrived with it is being suppressed only by the same financial engineering that keeps the bubble inflated. Eichengreen’s caution is well placed, but he stops short of the uncomfortable conclusion: the resilience is real, and that is the problem.

The Return of the Power Trust¶

Source: Project Syndicate

The holding-company structure that collapsed in the 1930s was not a failure of regulation but its precondition: the Public Utility Holding Company Act of 1935 was written precisely because pyramided debt had already gutted the industry. Vaheesan's point is that the current wave of utility mega-mergers is reconstructing that same architecture, with private equity and infrastructure funds substituting for the old utility barons. The leverage is the tell. When a utility is bought with debt, the interest payments become a fixed claim on household electricity bills before a single watt is generated. Ratepayers become the ultimate guarantors of financial engineering that delivers no new capacity.

The AI data-centre demand is the cover story. It lets consolidators present themselves as the only actors capable of building the grid of the future, when in fact the debt load makes long-term investment harder. A utility servicing heavy debt cannot absorb the risk of large capital projects; it must either extract higher rates or defer maintenance. The two pressures collide in the rate-setting process, where regulators are asked to bless higher charges on the grounds of reliability while the companies' actual priority is servicing Wall Street.

What is striking is the absence of any productive rationale for the mergers. Scale economies in electricity distribution are long exhausted; the gains are financial, not operational. This is overaccumulation finding a home in a regulated monopoly, where the risk is socialised through rate cases and the returns are privatised as dividends. The historical echo matters: the 1935 breakup was not a moral awakening but a recognition that the holding companies had become value extractors, not builders. Whether today's regulators will reach the same conclusion before the debt does the damage is the open question.

China’s Hunger Games¶

Source: Foreign Affairs

China’s food strategy is a rare case where the state’s leverage and its vulnerability are the same asset. Beijing’s ability to suspend soybean imports from the US, halt Canadian agricultural purchases, or cut off Japanese seafood over Taiwan is real power, but it is power derived from a structural weakness: the country cannot feed its own protein-intensive diet. The $215 billion import bill is not a sign of strength but a measure of dependence, and the authors are right to note that Beijing knows it.

What makes the piece useful is its historical framing. The CCP’s obsession with food self-sufficiency is not abstract paranoia. The 1959–61 famine killed roughly 30 million people; the 1906–7 famine helped bring down the Qing dynasty; food price surges fed the discontent behind Tiananmen. For a regime whose legitimacy rests on delivering material stability, the memory of starvation is a political category, not a historical footnote. Xi’s personal experience of hunger as a sent-down youth is not incidental colour — it shapes a policy posture that treats food as a matter of regime survival.

The contradiction is concrete. China’s leverage in trade disputes depends on its continued reliance on imports, but that reliance is precisely what Beijing is trying to eliminate. Every step toward self-sufficiency — the Syngenta acquisition, GM crop pilots, the 95 percent staple grain target — erodes the very market power the authors describe. The more successful China is at reducing its import dependence, the less it can use its market as a weapon. This is not a stable equilibrium but a race between two goals that pull in opposite directions.

For the US and its allies, the implication is uncomfortable. China’s food imports are not merely commercial flows but instruments of statecraft, and the threat of suspension is credible precisely because Beijing has demonstrated it will use it. The authors note that China is now seeking to become a leader in agricultural biotechnology, which would allow it to wield export leverage as well. That would complete the transformation from food importer to food power — a shift with obvious implications for inter-imperialist rivalry, though the article does not dwell on them.

The Promise of Workers’ Power¶

Source: Tempest

The 1976–77 split in the International Socialists is usually remembered as a sectarian squabble, but Bill Roberts’ account frames it as something more consequential: the moment a revolutionary organisation first had to confront the fact that the conditions which created it had dissolved. The IS was built in 1969 on the assumption that the mass radicalisation of the 1960s was the runway for a sustained turn to the working class. By 1976, the runway was gone. The rank-and-file rebellion of the early decade—wildcats, reform caucuses, the miners’ strikes—had peaked and was receding. The Left Faction’s argument was not that the strategy of implanting comrades in key industries was wrong, but that it had been overtaken by a shift in the class struggle itself. The majority responded by expelling a third of the membership.

What makes the debate instructive is that both sides shared the same foundational premise: socialism from below, the centrality of the industrial working class, the need for a revolutionary organisation. The fight was over how to read the conjuncture. The LF argued that the ebb required a more modest, long-haul perspective—one that could survive a decades-long retreat. The majority insisted on maintaining the original strategic ambition, as if the militancy of 1970 could be willed back into existence. The expulsion was the organisational form of a refusal to adjust to material reality.

The legacy is telling. TDU and Labor Notes, both rooted in IS work, survived precisely because they were reform organisations with concrete, limited goals—democratic union structures, rank-and-file networks—rather than vehicles for an immediate revolutionary project. The ISO, born from the expelled minority, carried the broader socialist banner through the lean years. The lesson is not that the majority was wrong to aim high, but that an organisation which cannot recalibrate its perspective when the tide goes out will tear itself apart before the next tide comes in. For a new generation of socialists looking to build in a period that is again opening up, the cautionary tale is less about strategy than about the organisational capacity to revise it without treating revision as betrayal.

Drone strikes power station near Libya’s largest oil refinery¶

Source: Al Jazeera

The attack on the Zawiya power station is the latest escalation in a campaign that has systematically degraded Libya’s energy infrastructure, and the government’s consideration of a full refinery shutdown signals a grim admission: the state can no longer guarantee the security of its most critical asset. The refinery has been hit repeatedly in recent days, and each strike chips away at the fragile legitimacy of a government that derives its authority, and its revenue, from the oil that flows through it.

What is striking is the anonymity of the attackers. No group has claimed responsibility, and the drone itself offers few clues. This is not a conventional military confrontation between rival militias; it is a war of attrition waged by remote control, where the cost of an attack is measured in the price of a single munition and the damage is counted in millions of barrels of lost production. The strikes are surgical, targeted, and devastatingly effective.

The government’s dilemma is acute. A shutdown would halt the refinery’s output, cutting off fuel supplies to western Libya and depriving the state of vital export earnings. But keeping it running invites further attacks, each one risking a catastrophic fire or explosion that could take the facility offline for months. The choice is between a controlled loss and a catastrophic one, and the fact that the government is even considering the former suggests it has little confidence in its ability to defend the latter.

This is the logic of a fractured state, where the means of violence are dispersed among actors who have no interest in the country’s economic stability. The drone strikes are not a tactic aimed at a military objective; they are a form of political messaging, a demonstration that the government cannot protect its own infrastructure. And as long as that remains true, the refinery will remain a target, and the state will remain hostage to whoever holds the remote.