sell at any price. In theory, arbitrageurs should smooth out any distortions this causes using derivative contracts. In practice, trading inflation derivatives throws up so many complications that opportunistic traders often cannot find a broker willing to take them on. Exhibit C is the unique function of ordinary Treasury bonds. Investors do not only, or even mainly, use them to bet on the future path of interest rates and inflation, but as a safe harbour when other markets are turbulent. They also trust that, during a big stockmarket crash, interest rates would fall and Treasury prices would rise, cushioning their losses. Erratic policymaking in America has tested both beliefs recently. But not to destruction: people still hold Treasuries with an eagerness that does not apply to TIPs. So Treasury yields are tugged down and those of TIPs are not, meaning the break-even— the gap between the two—is depressed. The effect is especially strong during a panic, when the safety of Treasuries is most appealing. Almost certainly, this helps explain why break-evens fell so low in 2020. If you want to guarantee your purchasing power no matter how far consumer prices rise, linkers are just the thing. If you want to know how much investors fear inflation, you may need to look elsewhere. ■ Subscribers to The Economist can sign up to our Opinion newsletter, which brings together the best of our leaders, columns, guest essays and reader correspondence. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/05/19/investors-fear-another- surge-in-inflation
Finance & economics | Free Exchange How should economists treat morality? Sometimes it is more than merely an exogenous constraint May 21st 2026 WHY IS BUYING heroin easier than hiring a hitman? Both are illegal. Yet find yourself in an unfamiliar town and ask around where you might get your fix and—possibly after being met by a few disgusted glances and wide- eyed stares—you are eventually given a phone number or directions to some sketchy area. Even if someone bothers to report you to the police, the constabulary is too busy to follow up on a single user. Start asking where you can get the services of a contract killer, however, and if you receive any leads at all, you are most likely to find yourself talking to an undercover policeman. This is one of the questions asked in “Moral Economics”, a new book by Alvin Roth, a Nobel-prizewinning economist at Stanford University. Mr
Roth’s Nobel was for his work on market design, particularly in those markets where two or more parties must be paired up in the absence of price signals (think university places or marriage). His studies led him to the trade in human organs—he set up a kidney exchange in which donors who are not a match for their respective intended recipients can swap—and, more broadly, to the murky world of “repugnant transactions”. These Mr Roth defines as ones where, like scoring heroin but not securing a hitman, buyers and sellers would happily transact but someone else not directly harmed by the exchange wishes to prevent it. Mr Roth’s subject is a good one. Morality clearly shapes markets far beyond those for heroin and hitmen. Like all of his discipline, he makes moral economics about trade-offs: are the harms of allowing an activity greater than the harms of disallowing it? After all, he writes, people “can’t generally expect to reach a consensus” about the principles at stake. The clear-eyed evidence he gathers is a useful place from which to argue about when prohibition works. Yet despite his attempts to “take moral and ethical concerns seriously”, the book too often treats other people’s principles as an irrational bias to be managed rather than a reasoned position to be argued against. That is a missed opportunity. Some of his frustration is understandable. What different societies consider repugnant can seem arbitrary. Horsemeat, a delicacy in parts of Europe, is off the table in California following a referendum in 1998. Many European countries forbid surrogacy on the ground that it violates the dignity of women to make the body into a tradable commodity, yet they permit some forms of sex work. In America it is the other way around: prostitution is illegal everywhere except for a few counties in Nevada whereas surrogacy is widely available. California allows paid sex—so long as it is being used to make pornography. Americans can be paid to donate blood but could not partake in “challenge trials” for covid-19 vaccines, tested on donors who expose themselves to the disease. British blood donors can count on at best a biscuit but are allowed to offer their life for a fee to see if a jab works. Such inconsistencies infuriate ethicists trying to find a coherent set of moral intuitions. For Mr Roth, they are a godsend. They provide an opportunity for some field experiments to see what happens when markets are legal or not and what kind of black markets come with them. Some rules of thumb
emerge: bans never work perfectly but they do reduce the frequency of the activity. There are usually ways around restrictions for the suitably motivated. A forum for Kazakhs in America suggests trying one or two Uzbek restaurants in Philadelphia for your horsemeat fix, or heading to Quebec. Horse lovers in California can content themselves that fewer are being eaten locally. Mr Roth suggests, reasonably, that policy should weigh the costs and benefits of banning an activity. He cites a paper by Scott Cunningham of Baylor University, in Texas, and Manisha Shah of the University of California, Berkeley, that took advantage of an accidental legalisation of indoor prostitution in Rhode Island after state lawmakers did not fully think through the implications of a bill. The researchers found that the result was fewer sexual assaults and sexually transmitted infections. This argues for policy experiments with licensed sex work. Where evidence is scarcer or more ambiguous, as with prohibitions on drugs that are both addictive and lethal, he suspends judgment. Too often, though, Mr Roth retreats to the position that there is not much point in discussing the principles because there will be no agreement. That makes morality an exogenous fact of life, something generated outside the economic model. It is a constraint, like geography, that must be recognised by economists. Sometimes, on Mr Roth’s view, it is useful: in contrast to this newspaper, he seems sceptical about legalising many drugs. Sometimes it is deadly: hundreds of thousands die every year because they cannot get the organ donations they need. Mr Roth’s reluctance to engage in arguments about principles is a shame. For one thing, he has nothing to be ashamed of. The picture that emerges from the book is of a deeply moral person, who believes in bodily autonomy, in not subordinating individual lives to a collective and in not accepting unnecessary deaths to spare some people from feeling squeamish. Perhaps more important, it lets Mr Roth skirt an uncomfortable question about the role of repugnance. He is right that it often serves to exercise social control: dietary restrictions let an in-group that shuns pork, or beef, or meat, ostracise the out-group that does not. But it is also a tool of social cohesion. Emile Durkheim, a French sociologist at the turn of the 20th
century, argued that societies divide the world into the sacred, covered by ritual and taboo, and the profane, the ordinary. One that treats everything as tradable might struggle to sustain the tacit co-operation on which markets, repugnant or otherwise, ultimately rely. ■ Subscribers to The Economist can sign up to our Opinion newsletter, which brings together the best of our leaders, columns, guest essays and reader correspondence. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/05/21/how-should-economists- treat-morality
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Science & technology | Charging ahead Breakthroughs for batteries could soon make them much better Solid-state cells would be faster and safer than today’s lithium-ion equivalents May 21st 2026 LIKE ANY champion who spends too long at the top, the lithium-ion battery is stagnating. Over decades as the battery of choice in everything from smartphones to electric cars and drones, its design has been tweaked countless times to improve its energy density and performance. But, some scientists say, those improvements are approaching their theoretical limits. Even the best models are prone to dying out in the cold, rapidly losing capacity or—as is the case for those in household devices—spontaneously catching fire.
At the same time, demand for batteries has never been greater. 30% of cars sold in 2026 are expected to be electric vehicles (EVs) which rely on them for power. Last year American homes and businesses installed a record number of big batteries. According to Wood Mackenzie, a consultancy, by the end of the decade installations could rise by almost 40%. Worthy challengers are desperately needed. Advances in materials science are at last bringing some within reach. Battery-builders are modifying existing materials and creating novel combinations to design batteries that store more energy while being safer and more stable than anything on the market today. The lithium-ion battery’s crown may be up for grabs. Solid-state batteries are among the most exciting alternatives. When a conventional lithium-ion battery is charged, lithium ions migrate from the cathode to the anode; when it is discharged, they return. The medium the ions shuttle through is called the electrolyte, usually a flammable, organic solvent soaked into all of a battery’s components. In solid-state batteries, however, the anode, cathode and electrolyte are compressed together as slabs. This means more conductive materials can be packed into the same space, allowing for energy densities as high as 500 watt-hours per kilogram (Wh/kg), compared with about 300Wh/kg for liquid electrolytes. They are also less likely to combust. Although solid-state batteries have been studied for decades, researchers have thus far been able to make only tiny versions for use in such devices as medical implants. The most significant barrier to scaling them up is brittleness. When cells are charged and discharged, the ions repeatedly embed themselves in the electrode material. That causes the battery to expand and contract, creating voids between the components that can lead to cracking and deformation. This slows down the ions and degrades the battery’s performance. In January researchers at the Shenzhen Institutes of Advanced Technology, part of the Chinese Academy of Sciences, took a big step towards overcoming the brittleness problem. They created a high-performing electrolyte material by alternately stacking layers of ceramic 1-100nm thick with similarly thin sheets of polymer. The stack was then placed