top-notch workforce by 11.5% and could reduce annual real GDP by nearly $500bn (1.6% of last year’s figure) within a decade. The squeeze is intensifying. On August 24th the administration proposed a fee of $103,265 for new H-1B visas, replacing an earlier levy struck down by a court. Meanwhile America’s rivals are moving in the opposite direction. China last year introduced its K visa to lure young scientists and technologists, while Canada and the EU have expanded routes for highly skilled workers. For decades America turned its ability to attract the best of the brightest into an extraordinary economic advantage. Mr Trump’s immigration crackdown risks leaving the country with fewer workers today and fewer innovators tomorrow. ■ This article was downloaded by zlibrary from https://www.economist.com/finance-and-economics/2026/08/27/the-economic-costs-of- donald-trumps-immigration-crackdown

Finance & economics | Buttonwood What makes a great investor? A big dose of luck, and a distinctly odd character Aug 27th 2026 One day in 1992 Stanley Druckenmiller marched into his boss’s office, saying: “George, I’m going to sell $5.5bn-worth of British pounds tonight and buy Deutsche marks.” George was George Soros and Mr Druckenmiller, his protégé, was running his “Quantum” hedge fund. The idea was that the Bank of England was trying to sustain an unsustainable exchange-rate peg which speculative pressure could break, forcing the depreciation of the pound and netting Quantum a huge profit. But the $5.5bn would put 100% of the fund’s assets behind one wildly risky bet. “That is the most ridiculous use of money management I ever heard,” Mr Soros said. “We should have 200% of our net worth in this trade.”

It worked, and Mr Soros became the man who broke the Bank of England. Plenty, including Mr Druckenmiller, reckon he thereby demonstrated two cardinal virtues of great investors: the wisdom to spot a winning chance and the nerve to bet the house on it. Perhaps. But for Buttonwood’s money Mr Soros also demonstrated two other crucial, and underrated, virtues. What a great investor really needs is a big dose of luck and a distinctly odd character. Mr Soros was certainly lucky. He was right that the peg was unsustainable over the long term and, once bank traders and other hedge funds piled in alongside him, victory might have been inevitable. But they might also have chosen differently, siding with the central bankers and steamrollering Mr Soros instead. Today his would-be successors need luck, too. Most people who work in finance have to be right pretty much all the time. A compliance officer who catches only two-thirds of the dodgy trades your bankers make, for instance, will soon need a new job. But a stock analyst can have an even lower hit rate and still be considered excellent, since no one can do much better. The fund managers building portfolios from analysts’ recommendations can merely hope to pick the right ones. Even if the analysts have spotted a stock with potential that everyone else has missed, it will outperform only if the rest of the market cottons on. Picking the right investment style takes luck, too. Half a century ago Warren Buffett became a superstar by buying shares that were cheap compared with fundamentals like earnings, then selling when they became expensive. Such value investing is now “something fund managers only do if they want to get fired”, in the words of one who was. Instead the momentum trade—of buying recent winners—has minted fortunes. If the past few weeks are anything to go by, that might be faltering, too. Even the whizziest strategies can underperform for career-wreckingly long periods. Cliff Asness, one of the world’s best quantitative investors, has described “getting kids at home asking: ‘Daddy, your stuff works, right?’” Mr Asness stuck to his guns and emerged unwrecked. In doing so, he exhibited the other trait of all great investors: oddness. It takes more than stubbornness to stick with a strategy that isn’t working, while your clients

lose faith and your children wonder if you are a chump. It takes an even more unusual character to do so in the financial world where, in contrast to the physical one, the rules are whatever everyone else agrees they are. In the end, Mr Asness’s doggedness was rewarded and his quant strategies began to perform again. When perseverance doesn’t work, an investor must be even odder to be great: they need to be able to change their mind. Imagine that Mr Soros’s fellow hedgies had turned against him, and he had faced the steamroller. It is hard to picture a man with the chutzpah to bet 200% of his fund against a central bank going on to admit he was wrong and abandon his bets. But Mr Soros has been betting big since the 1970s. You don’t manage that without knowing when to hold ’em and when to fold ’em. Even this combination of arrogance and humility is not enough. Great investors must be able to cut their losses without avoiding risk in the first place. They must pore over detail yet still communicate their ideas plainly— especially when these are not panning out. They must know their portfolio inside out yet remain detached enough to dump any of it the instant the facts change. These qualities do not usually co-exist in the same person. When they do, that person is likely to be unusual. So if you are searching for a great money manager, look out for a weirdo who can roll lots of sixes in a row. Or just forget about it and buy an index fund. ■ This article was downloaded by zlibrary from https://www.economist.com/finance-and-economics/2026/08/25/what-makes-a-great- investor

Finance & economics | Free Exchange Tax breaks for charity donations are a poor way to do good They should be scrapped Aug 27th 2026 Over more than 20 years Sheldon Solow, an American property billionaire who died in 2020, gave a trove of art to his own foundation. This seemed generous: the public would be able to see works by masters like Matisse and Miró. Yet for years the gallery remained shut; even now it opens for barely more than one afternoon a week. The only real winner was Solow himself, eligible for tax breaks in return for his gifts. A similar study in ineffective altruism is Elon Musk’s foundation. Tax-deductible donations have built a stash of over $14bn, yet it mostly sits idle. What does go out is poorly targeted. The largest grant of 2024, worth $370m, went to a charity set up by Mr Musk whose main boast is a child-care programme near SpaceX’s Texas offices, serving ten tykes.

In 2020 American households earning over $500,000 a year claimed more than half the cash that government spent on income-tax breaks for charitable giving. As AI mints a new crop of billionaires, yet more plutocrats will be able to use these schemes to reduce their tax bills. Most donations go to better causes than private art collections. Tax-advantaged dollars support hospitals and keep foodbanks going. They even support services that the state would need to provide if charitable funding dried up. But it is right to call time on such tax reliefs. In America alone they are likely to cost over $70bn in forgone revenue in 2026 (roughly the GDP of Alaska). There is flimsy evidence that these schemes prompt significant extra giving, the money is often misspent, and the result is more power for the wealthiest. Using tax breaks to encourage giving has a long history. During the first world war Congress was so worried that high taxes would sap tycoons’ generosity that it introduced income-tax deductions to encourage them. Today most rich countries have such schemes. In America you can deduct charitable donations from your taxable income on your tax return. In Britain charities can claim a portion of the donor’s tax payments directly from the government using a scheme called Gift Aid. (Higher-rate taxpayers can also claim a rebate.) The key test is whether charities gain more in additional donations than governments lose in revenue. Academic estimates vary wildly. Although some are bullish and suggest that donations can exceed lost revenue, some recent studies are more equivocal. In 2024 Daniel Hungerman of the University of Notre Dame and his co-authors found that, if the government uses tax reliefs to make the cost of giving 10% cheaper, it incentivises donors to give only 6% more on average. The state gives up more than charities gain. How incentives are designed matters. American reliefs are claimed months later, during the long dark night of the soul that is filling in a tax return. Studies suggest such rebates prompt less extra giving than when the charity itself makes the claim, as is possible in Britain. When a smiling teenager at the local donkey sanctuary proffers a form and mentions that the government will add 25% to your donation, it is hard to say no.