Cartoon: Who benefits from AI? A lighter take on the news Jul 30th 2026 Dig deeper into the subject of this cartoon: How to spot AI writing AI is getting better at writing. Humans must get better at editing Quantum computers promise mathematical superpowers AI and quantum computers will be frenemies You can see previous ones here. This article was downloaded by zlibrary from https://www.economist.com/the-world-this-week/2026/07/30/cartoon-who-benefits-from- ai
What the Big Mac index reveals about a global currency beef It is past time to upgrade to post-quantum encryption China is testing America’s defence lines in Asia Europe’s fires are just the start AI is getting better at writing. Humans must get better at editing America’s startup boom offers hope for the future of work
What the Big Mac index reveals about a global currency beef It highlights economic problems—and helps explain how to solve them Jul 30th 2026 LOCKED IN A vault near Paris, ensconced in three bell jars, sits a small cylinder of platinum alloy, forged in London in 1879. Known as Le Grand K, it long served as the definitive standard for measuring the kilogram. There is no universal standard for measuring the monetary heft or purchasing power of currencies. But The Economist has a favourite candidate. It weighs up to 240g. It is ensconced in a cardboard box. And you can find it under two Golden Arches. Our version of Le Grand K is the McDonald’s Big Mac. The Big Mac index we forged in London in 1986 will be 40 years old in September. What began as a playful thought experiment has taken on a life
of its own. It has amused readers, intrigued currency traders and irritated central banks. It has also attracted critics who think fast food has nothing to say about global economics. It was born in an era of high monetary diplomacy, when policymakers fretted that the world’s most important currencies were horribly misaligned, inviting financial calamity or trade protectionism. Forty years on, similar debates are raging once again, this time about the dollar, yuan and yen. In a world of currency tumult and controversy, our palatable guide to exchange rates is as valuable as ever. Fast food may seem an eccentric choice as a standard of value. But the Big Mac has unique advantages. You can buy it almost anywhere and it tastes much the same everywhere. McDonald’s calibrates its appearance, texture, flavour and smell with the same diligence that scientists lavished on that 1kg cylinder in Paris. Wherever you purchase your Big Mac, you are buying much the same thing. That makes it a good measure of the bang you can get for your buck. In America $100 buys about 16 Big Macs. That is roughly the same burger- buying power as 100 euros, 426 Chinese yuan, or 8,039 Japanese yen. Yet $100 in fact buys about €87 in the foreign-exchange markets, or 677 yuan, or over ¥16,000, showing how far from their purchasing power the world’s currencies have strayed. The index does not satisfy everyone. Some think it’s too narrow—what could one product possibly say about an entire economy? Others think it’s too broad—by some estimates, inputs that cannot be traded easily across borders, such as labour and retail space, account for over half the Big Mac’s cost. Some doubt its predictive value for exchange rates, others doubt its descriptive value as an indicator of a currency’s true worth, and a third camp doubt its prescriptive value as a guide to where exchange rates ought to be. Some just hate the puns. To judge the oomph of currencies, it is obviously better to compare the price of thousands of products, rather than just one. But the elaborate measures of purchasing power assembled by organisations like the World Bank also have their flaws. Those global figures appear only once every three years and with a long lag—for example, 2021’s numbers came out only in 2024. Compiling them is one of the largest statistical initiatives in the world. They
are also hard to verify and understand. The Big Mac index is quicker, fresher and easier to digest. And yet despite that, our results line up reasonably well with theirs. Of the 54 economies that appear in both our index and the World Bank’s database, only seven were deemed cheap in one but expensive in the other. That is because the Big Mac, though a single product, has over 60 distinct ingredients, from beef to xanthan gum. It also draws on labour and property markets wherever it is made and served. The Big Mac index’s predictive record is admittedly mixed. But it showed correctly, for example, that the euro was overvalued when it came into being in 1999. What to make of the index now once again finding that the euro, yuan and yen are out of kilter? Earlier this year, the IMF suggested China’s currency was 16% weaker than economic fundamentals implied. This competitive edge has helped the country rack up enormous trade surpluses in goods, which reached almost $1.2trn last year. President Emmanuel Macron of France has described these imbalances as “unbearable” and a mortal threat to European industry. He has threatened strong measures if China does not relent. Donald Trump, America’s president, has often been the world’s most strident critic of cheap Asian currencies. In January he described how he “used to fight like hell” with China and Japan, which “always wanted to… devalue, devalue, devalue”. Such talk from the White House has ebbed lately. But currency traders are abuzz every few months with rumours of a new Plaza Accord, the 1980s pact to devalue the dollar—despite the extreme unlikelihood that such an agreement could work today. The Big Mac index can play a role in this high-stakes debate. It makes clear that a cheap real exchange rate means a dollar price of burgers below America’s price. This imbalance goes along with low domestic consumption on China and a yawning budget deficit in America—and the flows of capital needed to sustain them. For the yuan to improve its standing in our index, it has two paths. Either the currency must strengthen or China’s Big Macs must rise in price, faster than they rise in America.
A sharp rise in China’s yuan could undermine the country’s growth and worsen its deflationary tendencies). It might bring about a relevelling of global trade, but it would be a levelling-down. Better for China’s policymakers to stimulate the economy so that wages and prices rise more quickly. That would make the yuan less undervalued, even if its exchange rate remained steady. Economists would call it a rise in the “real”, price- adjusted exchange rate. About 10km from the Elysée Palace, Le Grand K still sits in its vault. It was retired in 2019 after 130 years of service. If currencies did ever move into close alignment with their purchasing power, the Big Mac index might also become redundant. But for as long as currencies remain unmoored, and the Big Mac remains consistent, our index will serve a useful purpose— however distasteful its critics may find it. ■ This article was downloaded by zlibrary from https://www.economist.com/interactive/leaders/2026/07/30/what-the-big-mac-index- reveals-about-a-global-currency-beef
It is past time to upgrade to post-quantum encryption When the quantum breakthrough comes, data being harvested today will be exposed Jul 30th 2026 IT IS not just artificial intelligence that is sparking hopes of an imminent productivity miracle. Quantum computing, another long-promised technology, is also making progress and attracting serious interest. Investment in startups in the field rose six-fold in 2025, to $13bn, according to McKinsey, a consultancy. Both startups and tech titans are racing to exploit the technology. In May the Trump administration pledged $2bn to take equity stakes in nine quantum-computing companies. Quantum computers exploit the weird physics of quantum mechanics to perform some types of calculations at breathtaking speed. Jobs that would
take ordinary, “classical” computers billions of years might be polished off in just a few hours. But whereas AI is a general-purpose technology that promises to transform many fields of endeavour, the mathematical superpowers of quantum computers are likely to help in only a few areas, such as making possible rigorous digital simulations of complex physics and chemistry. For many tasks, quantum computers will offer no improvement at all over cheaper ordinary machines. In one area, though, they are certain to make a world of difference—and perhaps turn out to be destructive. The security and privacy of global commerce and communication depend on forms of encryption that would take classical computers billions of years to crack. A powerful quantum computer might break such codes in just a few minutes, using an algorithm that has already been designed. On “Q-day”, as geeks call it, the encryption methods that permit everything from credit-card details to racy photos to be securely and privately transmitted will no longer be safe to use. Alarmingly, encrypted data being transmitted today is already at risk since, in reality, Q-day will be a gradual process, not a single event. Intelligence agencies are already harvesting encrypted data in the belief that they will be able to mine it for secrets later. Cybercriminals could be doing the same. The good news is that a fix already exists. Post-quantum cryptography (pqc) is based on maths that does not seem to be vulnerable to quantum computers, and can be implemented by classical computers now. It is not as battle-tested as existing encryption standards, which have gone unbroken for decades, but the two can be bundled to provide both sorts of protection at once. Web-browsers such as Firefox and Chrome have already enabled pqc, as have Apple’s iMessage service and many big cloud-computing companies. Cloudflare, one such firm, reports that 59% of the front-end web traffic it handles has made the switch, up from 38% a year ago. Unfortunately this still leaves a lot of data exposed. Just 11% of the servers which Cloudflare deals with on the back end support pqc. And many organisations are full of internet-connected equipment that may not be easy to upgrade. The modest chips in things like sensors or medical devices may be too weedy to handle PQC, which is usually more computationally demanding than standard cryptography. If a gadget’s maker has gone bust, or