The project’s significance is not that it offers an alternative to Honduras, but that it provides Honduras with an additional tool for development. For decades developing countries have competed to attract foreign investment, entrepreneurs and skilled workers. Próspera has succeeded in drawing all three to Honduras, people who otherwise would have settled in Dubai, Miami or Singapore. Projects like Próspera are most valuable when they expand the range of opportunities available to local residents while attracting new capital and expertise from abroad. Their success should ultimately be judged not by their novelty, but by whether they create jobs, investment and knowledge that remain in the host country. Próspera encourages Honduras to think ambitiously about its future. That may prove to be its most enduring contribution to Hondurans. Humberto MaciasRoatán, Honduras As your Free Exchange column noted (June 13th) new proposals for the public ownership of corporate shares, particularly in AI companies, are attracting political attention. In the 1940s Arthur Lewis, an eventual Nobel prizewinner in economics, proposed share acquisitions as a Labour Party policy in Britain. He noted that if the government ran a revenue surplus and invested it in corporate shares, this would redistribute wealth towards the aim of equality, whereas nationalising the commanding heights of the capitalist economy, Labour’s then policy, would not. Sovereign-wealth funds and index investment were not part of that discussion. I have argued that any social-endowment fund must be a government-owned organisation, but run independently, with a board of trustees and managers who would be only indirectly responsible to the democratic legislature. If instead share acquisitions are to be decided by politicians and their friends, the best we can expect is the attempt to pick winners, that will in fact mostly be losers. And, more probably, corruption on a scale that will leave the mass of the population poorer, not richer. Roger McCainProfessor emeritusSchool of EconomicsDrexel UniversityPhiladelphia
“Building an innings” (May 30th) reported on Vaibhav Sooryavanshi, India’s 15-year-old cricket star. Everybody is in awe of him; it is not just the runs he scores but the fearless approach he brings to the game. Cricket has transformed dramatically since India lifted the Prudential World Cup in 1983, and today the country is among the leading powers in the game. IPL 2026 has produced a new sensation in Vaibhav Suryavanshi. What is particularly refreshing is the absence of affectation. Success does not appear to have gone to his head. Watching him bat evokes memories of the fearless West Indian greats—Gordon Greenidge, Desmond Haynes and Vivian Richards—whose attacking cricket captivated an earlier generation. Yet the fascination with sporting prodigies often obscures the factors behind their success. Behind every wonder kid lies a network of family support, coaching, discipline and perseverance. Talent alone is never enough. As Shakespeare observed, “Some are born great, some achieve greatness, and some have greatness thrust upon them.” In sport greatness is rarely a miracle. It is the product of countless hours of practice and an unwavering commitment to improvement. Hailing from Bihar, a state not traditionally associated with producing international cricketers, Mr Sooryavanshi is an inspiration to countless youngsters across India. DR NAWAL THORATHead of the English departmentGovernment College of Arts and ScienceChhatrapati Sambhajinagar, India
I was pleasantly surprised to see Chaguan writing about Shaoxing as China’s most liveable city (June 20th). I was born and raised there. Shaoxing’s ageing self-made entrepreneurs have enabled many children from relatively well-off families to migrate within China to cities such as Shanghai and Hangzhou, or even to study and settle abroad. I see many such examples around me. Although Shaoxing is growing older, its well-developed textile industry continues to inject fresh vitality into China’s patterns of population mobility. The wealth accumulated since the reforms and opening-up of the late 1970s and 1980s, combined with the one-child policy, has created a striking generational divide. With all the resources and attention directed towards a single child’s development, children in those high-income, low-cost-of- living cities have enjoyed an unprecedented level of investment, regardless of gender. Most of my grandparents did not complete lower secondary school. My parents began working after finishing secondary education. I completed both my undergraduate and postgraduate degrees in London. The longer one lives in a metropolis such as London, the more keenly one feels the constraints and ceilings on income and career progression. Increasingly, Shaoxing natives overseas are considering returning to China to start businesses. Many of these young people come from families that already possess established enterprises and industrial supply chains. Among successive cohorts of students who have left Shaoxing, it seems ever more likely that a growing number will return to the city to build their own ventures. Chenlu Yu London I was humbled to discover in your review of Martin Sixsmith’s “Suing the Kremlin” that his 304-page book is “readable in a single sitting” (“See you in court”, June 20th). Perhaps you could ask your Bartleby columnist to tell us how to avoid distractions and get such things done. Yacov ArnopolinNew York This article was downloaded by zlibrary from https://www.economist.com//letters/2026/07/02/was-the-trump-administrations- blocking-of-anthropics-fable-and-mythos-models-dystopian
If you thought the global financial crisis was bad… America’s Supreme Court was right to expand presidential power
If you thought the global financial crisis was bad… When the crash comes, stabilising markets will be easy compared with reordering society for AI, writes short-seller Carson Block July 2nd 2026 WITHIN A FEW years, artificial intelligence will displace a significant portion of the world’s highly paid knowledge workers. Aggregate demand will suffer, but flows into retirement investment accounts will turn net- negative: workers won’t just stop paying in, they will need to withdraw funds. These outflows will come largely from passive investment funds, particularly S&P 500 index trackers. Although such redemptions involve selling every constituent in proportion to its index weight, the price impact will not be evenly distributed. The AI “mega-caps” that have powered the index higher, such as Nvidia, Microsoft and Amazon, are also the names
whose valuations have been most dependent on mechanical passive inflows as the marginal buyer. The result, ironically, is that the companies powering the AI revolution are likely to suffer the largest price drops. AI is at the inflection point at which large language models are improving at a rate that is non-linear and will soon become exponential because they are themselves coding their successors. The most sophisticated users of AI are in tech companies. Using the current generation of models, they have in many cases reduced teams that previously had half a dozen workers or more to just one. It is quite possible that within three to four years AI will have replaced 15% of jobs in America’s broader knowledge economy. The two counter-arguments are the “Jevons paradox”—the historical experience that new technology that increases efficiency also increases demand, thereby creating new jobs that offset losses—and scepticism about the slope of the adoption curve. Both will be proved wrong. Humanity’s ability to innovate and invent clearly outpaces its ability to adapt to its innovations and inventions. AI models are doubling in power roughly every six months. This means that workers made obsolete will not be able to develop the skills to use AI as a tool, rather than to compete with it. Even if demand for services and products increases because of falling costs and prices, many displaced workers will still be obsolete, with more workers made so by successor model generations. AI will have such a profound impact on businesses’ costs and pricing that failure to adopt quickly will prove existential for a large swathe of the economy. The job displacement will fall disproportionately on highly educated, well- paid workers whose retirement savings drive America’s stock markets. Michael Green of Simplify Asset Management has shown how passive investing has resulted in “broken” equity markets that are largely driven at an index level by flows into retirement accounts. His and others’ research shows how passive investing has led to multipliers on the aggregate market and individual stocks that cause the net inflow or outflow of one dollar to have a much larger impact on the stocks in which it is invested, possibly as high as a multiple of 100 for the largest firms.
The S&P 500 has become an index that creates its own momentum for its largest constituents. Because the top ten companies now represent an unprecedented share of the market’s value, the index is no longer a diversified basket but a concentrated volatility trap. When the professional class begins to draw down its accounts to service mortgages, the resulting market impact will be sudden and violent, as passive funds are forced to sell the index to meet the redemption demands of the displaced losers. Ironically, the companies with the highest multiples, which present the greatest risk from net outflows, are largely those that make up the AI stack. When the labour-displacement thesis plays out, it will be the stock prices of these new-world stars that get clobbered the hardest. The resulting crash in equity prices, particularly combined with falling aggregate demand, will itself be enough to cause a financial crisis on the scale of the global one of 2007-09, if not larger. Problems in private credit and insurance companies’ balance-sheets may well make things worse. A reduction in liquidity globally will affect all asset values. Deflationary pressures will mount. The good news is that the crisis of almost 20 years ago has given policymakers a well-tested playbook to restore liquidity and reflate assets. The bad news is that stabilising the financial markets will be the easy bit for governments. They will struggle far more to manage the reordering of society that will result from the mass displacement of highly productive labour. Ultimately, in another irony, the AI revolution will lead to a world in which many consumers no longer have the income to participate in the revolution. Remaking a society in which growth has been decoupled from employment is a task for which today’s political structures are unprepared, to put it mildly. We will witness not just an almighty market correction, but the end of the existing social contract. In terms of politics and policy, as the old saying goes, “You ain’t seen nothing yet.”■ Carson Block is the founder and chief executive of Muddy Waters Research. This article was downloaded by zlibrary from https://www.economist.com//by-invitation/2026/06/28/if-you-thought-the-global- financial-crisis-was-bad