Private Fusion Takes Off

US-led Western policies aimed at the technological and, in effect, commercial isolation of China — exacerbated by China’s ongoing cooperation with Russia despite sanctions over its invasion of Ukraine — have created a situation in which leading-edge innovation is becoming fragmented in both the private and the governmental spheres. This is inherently inefficient. Yet it is also spurring state investment at new levels, such that the overall effect, over the medium term, could well net out as positive. Nuclear fusion is a particularly interesting example that merits a closer look.

Fusion has always seemed five years away, rather as Brazil has proverbially been called “the country of the future … and it always will be.” (The unkind line is attributed to De Gaulle.) But as the US-China dynamic has become an enduring feature of geopolitics investment in fusion has increased dramatically, particularly in terms of public-private partnerships.

The main global fusion project since the 1980s has been the International Thermonuclear Experimental Reactor, known as ITER. Born from a meeting between Ronald Reagan and Mikhail Gorbachev and based in southern France, ITER has the US, China and Russia among its permanent members. Each member state contributes some particular part of the central project, a reactor based on the tokamak method. There is no practical way to excise one or another ITER participant. Sanctions against Russia for invading Ukraine have so far not dislodged Russia from ITER, although its participation has been controversial since the invasion.

ITER illustrates a type of international cooperation typical of the Reagan-Gorbachev era and now apparently a thing of the past. However, the swift decline of globalist cooperation has been matched in the fusion sector by a growth in government financing, private investment and public-private partnerships. Public funding, according to a new report from the Fusion Industry Association, went from $271 million in 2023 to $426 million in 2024 so far, or roughly half the private share of $900 million. (Funding to date is on the order of $7 billion.) The US, EU, British and Japanese governments have all shown significantly increased interest in working with private fusion companies. ITER itself is turning more toward private partnerships. Meanwhile the Chinese government continues to prioritize fusion work in government labs, universities like Tsinghua, and the (Chinese-style) private sector.

The growth of the fusion industry is a demonstration of how private-sector approaches differ from governmental ones. Tokamak is just one of several leading technologies for fusion, and companies are placing a wide variety of bets on various technologies, any one of which could prove to be the winner. The number of private fusion companies has doubled in the past six years. Some major companies, like Shine (US, $800 million in funding to date), are working to develop viable revenue streams, such as producing Lutetium for cancer treatment, while keeping an eye on the moonshot of clean, cheap energy. Others, like tiny Terra Fusion, also in the US, are startups pursuing one particular technology that they hope will be the breakthrough. Roughly half of fusion companies are in the US. Globally, most fusion companies have university and defense partners — in the US case, the national labs (managed by the Department of Energy, as their earliest priority was nuclear power) and the Department of Defense.

There is also significant US participation from ARPA, one of many echoes of the Internet  development process of the 1970s. (The earliest Internet was the ARPAnet.) Unlike in that era, geopolitical fears are now combined with climate change.  Fusion promises an end to carbon-based energy systems. However inefficient it might be to have politically structured private sectors, it could also prove to bring a technological solution to climate change sooner than would otherwise have been the case.

Vance Notice

This post was published on Friday, 21 June, two days before President Biden renounced his candidacy for reelection.

The current high level of partisanship in the media, even the business press, has made it difficult at best to find objective analysis that favors neither party. For example, former President Donald Trump’s announcement of J.D. Vance as his running mate was generally met with a certain dismissiveness. The Economist’s midweek newsletter read: “Mr Vance will not swing many votes. A 39-year-old articulate anti-globalist, anti-big business, anti-immigration, pro-worker, MAGA enthusiast, he does little to broaden Mr Trump’s electoral appeal.” SIG’s analytical view is that Vance will indeed broaden Trump’s appeal to working-class, lower-middle-class, and non-white voters. Trump has been steadily taking these formerly core Democratic constituencies into his column since the 2016 campaign. And in a number of states they could very well make the difference between a Trump presidency and a Biden (or Harris) one.

Trump’s remarks at the convention Thursday night included an appeal to “every citizen, whether you are young or old, man or woman, Democrat, Republican, or independent, Black or White, Asian or Hispanic,” and in the previous days convention-goers had heard from a Muslim woman offering a prayer in Arabic, a black pastor, and a variety of non-white lawmakers and officials. The Republicans’ big-tent approach began in the campaign of the younger George Bush but Trump has steadily extended it. He did better in 2016 with nonwhite voters than Mitt Romney had four years before, and somewhat worse with white voters as a whole. Trump also could not have won without taking some Obama voters away from Hillary Clinton. Trump did noticeably well with working-class and less-educated voters. Those two groups, of course, contain a great many non-white voters. Given the national white majority and the realities of racial discrimination, working-class politics and non-white politics have often been treated as highly distinct and even antagonistic. Trump seemed to be following a different path.

Biden and the Democrats, meanwhile, were losing their once solid hold on the non-white vote. In 2012, Barack Obama carried the non-white working class (non-college-educated) by 67 points over Romney. In 2020, running against Trump, Biden carried the same demographic by just 48 points. By February 2024, one reputable poll was finding that Biden’s margin had slipped to 6 points: 47 percent to 41 for Trump. The same poll found that white and non-white voters without college degrees were converging in their views on the respective qualities of Biden and Trump and on the state of the economy. Indeed, non-white voters in this category were slightly less likely than their white counterparts to feel that Biden’s policies had benefitted them.

The Democratic party has long prioritized the non-white vote as such. What seems to be happening is not that Biden and the Democrats are losing non-white voters so much as losing working class-voters, among whom non-whites are disproportionately represented. (A 2024 poll found that 55 percent of non-whites identified themselves as in the lower or working classes, compared to 36 percent of non-Hispanic whites. The white-non-white ratio in the US is roughly 60-40.) At the same time, Democrats’ association with prioritizing the non-white, and particularly the black, vote might also have led some less-educated whites to back Trump. Both lines point in the same direction.

Trump’s working-class support is a principal reason why he is doing well against Biden in polls. In Virginia, for example, Biden has gone from a 10-point margin in 2020 to 3 points in recent polls, and possibly less. Trump, meanwhile has seen his margin of the Virginia working-class vote grow from 6 points in 2020 to 24. In the battleground state of Pennsylvania, Trump’s lead among likely working-class voters has doubled over the same period. Nationally, Trump carried the working-class vote by 4 points in 2020 and now is polling at a 17-point margin or above.

Trump and Republican officials know all this, and the party platform, which Trump had a decisive hand in shaping, reflected it. The platform was noticeably less strong than in the past on fiscal rectitude, more supportive of Social Security and Medicare, more emphatic about creating jobs (particularly in manufacturing) and less emphatic about abortion. These new positions are all in line with data about working-class policy preferences.

This waxing working-class and non-white Republican constituency is the large target at which J.D. Vance is aimed. His convention speech on Wednesday was preceded by an introduction from his nonwhite, Hindu wife, Usha Chilukuri Vance, a child of immigrants, who went on to take a seat next to Trump. Vance then gave a speech squarely focused on promoting Trump and the party as ardent defenders of the American working class against their enemies foreign and domestic. His biography enabled him to do this with a believable passion that Trump has not been able to reach. But more than that, Vance brought to bear the skills of a correspondent and public-affairs specialist (his position in the Marines), an undergraduate student of political science and philosophy, and a successful author (Hillbilly Elegy). (Usha Vance studied history as an undergraduate at Yale then went on to get a history MPhil from Cambridge as a Gates scholar.) Vance was able to position his working-class story within a 250-year narrative of patriotic struggle. He referred repeatedly to his family’s graves on a hillside in Kentucky, generations of poor ancestors whom he expected to join, and whom he expected his family — the Vances have two sons, Ewan and Vivek, and a daughter, Mirabel — to one day join as well.

Vance brings a distinctive and potentially quite powerful kind of patriotic narrative in support of the years-long trend of growing working-class and non-white support for Trump and his party. That trend in turn is likely to be decisive in this year’s contest. Among the many implications for investors are the solidification of industrial policy and protectionism in the world’s most important economy, government prioritization of onshoring and the preservation of the existing social safety net.

After the New Cold War

To what extent will the U.S.-China struggle take the rest of the world along with it? Recent developments in the technology sector suggest that containment of China has a long way yet to run, regardless of who becomes the next U.S. president. At the same time, China is showing no signs of abandoning its core strategy of using state policy to control citizens at home, build Chinese companies that can crush competition abroad, and exert maximal autarkic control of its domestic market. However, the great success of globalization has been the creation of a global middle class with incomes, educations and expectations all on an unprecedented scale. There is now a generation or two in adulthood that has grown up watching the West destroy itself and slowly abandon the freedom of movement of capital, goods, services and people that was the premise of globalization. This generation, outside the West and (perhaps) China, does not think it is helpless. SIG’s view is that the global generation in its late 20s and early 30s is already pivoting away from attachment to the world of their parents and the disastrous end-game that appears to be their parents’ legacy.

U.S. policy for the technological isolation of China has been steady and focused since about halfway through the first Trump administration. It has expanded in breadth and sophistication under the Biden administration. Technology companies have integrated this into their strategies, giving what began in the government sector strong private momentum. Consider a project with the very Bondian acronym HEIST. It is a private-public-academic partnership now backed by NATO. Its goal is to create ways for Internet traffic to be switched from undersea cables to networked outer-space satellites in the event an ocean cable is disrupted. (Students of Internet history will recall that the Internet itself was developed out of private-public-academic programs for ensuring continuity of communications in the event that land-based systems were disrupted.) HEIST is just one example of how the private and academic sectors are factoring in a long-term tech conflict between the U.S. and China. Another is OpenAI’s decision to clamp down on use by Chinese developers of ChatGPT. China was never on OpenAI’s list of “supported countries and territories,” but the move is nonetheless significant.

Of course, moves like this all call forward responses from China and Chinese companies. China’s GPS alternative, BeiDou, has had this problem set firmly in view for over 20 years. Coverage of the OpenAI decision has emphasized how quickly — measured in days if not hours — Chinese tech companies offered “moving packages” to OpenAI customers on the mainland whose VPN and other outward connections to OpenAI would no longer work. Huawei has retooled itself to deal with the expanding bans on its use overseas. It is too much to say that U.S. tech containment of China has been a good thing for Chinese businesses but it has been a spur, if of a peculiar kind.

The Trump policies on China that Biden kept and developed were guided by people such as Robert Lighthizer (Trump’s trade representative) and Matt Pottinger (Trump’s deputy national security advisor), who are expected to be part of any second Trump administration. There is every reason to anticipate policy consistency, in this particular field, regardless of the victor in November. The same is true in China.

In a real Cold War, this bifurcation between two hostile major powers would extend itself to the rest of the world. There is an element of that today. Germany, for example, after years of U.S. pressure, has decided to take Chinese technology (from Huawei and state-owned ZTE) out of its 5G networks. However, most states and national economies with any choice in the matter have opted either to blend U.S. and Chinese systems or, better yet, to develop their own.

To opt out of a forced choice between major-power antagonists while opting in to the cross-border platforms that are being shaped by that antagonism is a characteristic move for the generation that is now starting its first companies and reaching the lower rungs of government. Chinese autarky and U.S. industrial policy alike have made it clear to the rest of the world that its interests are not of lasting concern to the major powers. At the same time, the spread of middle-class wealth, education and expectations has empowered people around the world to feel they have options. Their politics is shaped by the possibilities for identifying and exercising those options. Ironically, perhaps, for a generation formed by borderless globalization, the chosen venue for exercising those options is not a transnational one but the nation and national or regional economies.

This should not be surprising. Neither the U.S. nor the EU is in any mood to guarantee the sanctity of the global public sphere. China, despite its protestations, is even less globally minded. The fact that addressing global climate change, the signature challenge of the coming generation, is being hobbled by electric-vehicle and solar-panel legislation is truly telling. The major powers that are alone in a position to see through global solutions to global problems are now the very powers making them impossible.

In such a situation, for the world outside the West and China (plus Russia), nationalism and regionalism are the least-worst solutions. The coming generation will be elderly by the time COP75 rolls around and the U.S., EU, Russia and China all bury their many hatchets and rediscover globalism. Meanwhile, away from the current agon, a busy world is identifying problems and designing solutions with no expectation of rising to the universal plane. Globalization has lost its teleology.  But it has created a world in which ambitious people can remain anchored and protected in national economies while also staying closely connected to the world outside, steering their diverse courses with as little reference as possible to great-power conflict.

Our Age of Political Nostalgia

By Dee Smith

If homo sapiens has been around for about 300,000 years, then we have lived all but 3 percent of that in circumstances almost entirely different from the present day. To put it another way: even with a generous allowance of 10,000 years or so for settled life in something like cities (which is what “civil”-ization means), for 97 percent of our existence we lived in very small groups and, except for wide-ranging nomads, with very little change over vast periods of time (centuries or even millennia). And even the nomads could usually count on migration routes leading them to familiar places, over and over again.

We are now thrust into a world where we are clustered into groups of a size unimaginable to our ancestors. They would seldom encounter anyone outside their little bands; now we all meet people every day whom we don’t know and who are different from us, and we need to co-exist with them. We are required to deal with levels of novelty, complexity and social regulation for which we are not adapted.

This goes a long way, I think, towards explaining what is happening politically and socially around the world today. Our lives are full of what scientists call “baseline resets” — we have to recalibrate our understandings and expectations over and over. We hardly become accustomed to a certain configuration of things, and then it changes. And it changes yet again. Some people embrace this. The “move fast and break things” entrepreneurs claim to do so. For most of us, however, it is highly disorienting, uncomfortable and emotionally distressing.

If we could just go back to the way things were! Vast numbers of people, of all socio-economic groups, pine for a world in their past — often a world that never existed in the way that they believe it did.

In the US, for example, so-called “liberals” — Democrats and their ilk — bemoan the loss of a US-led Liberal International Order, a rules-based international system that many analysts believe never actually existed in the way that it is remembered. This brand of nostalgics sees the post-WWII era, and particularly the “long decade” between the fall of the Berlin Wall and the 9/11 attacks, as a golden age of international cooperation, when in fact it was a short period of unipolar U.S. dominance following the collapse of the Soviet Union, a period in which there was a great deal of conflict. Of course, it seems like a golden age to those who found themselves briefly its masters! But they fear an approaching age when the “progressive” system and message no longer resonate or hold, and overt authoritarians, operating from positions that they abhor and see as threatening, are ascendant.

On the other side, in the US, many Republicans and members of right-wing movements harken back to a lost age of white social dominance. To some extent, this did exist, but it was not the halcyon period they that think they remember. Firstly, most of them were not actually alive at the time. It was a period filled with hatred and civil violence. Furthermore, the definition of who and what is “white” has never been clear. For example, Italians in the US were not, and then they were. Some Hispanics would be considered, or consider themselves, white; others would not. Besides, return to a lost white world is no longer even a possibility. The US has become “minority-majority.” White nostalgics fear an age when what are remembered as traditional white values, if not white people, become sidelined.

Similarly, the term “conservative” has been warped beyond recognition. What is it, exactly, that conservatives wish to conserve? The fact that “move fast and break things” tech leaders call themselves conservative and support conservative politicians is an oxymoron in the most literal sense.

The situation is similar in many other places around the world, whether the past is Soviet Russia, Maoist China, or various strongman dictatorships or ephemeral democratic Camelots. For much of the last couple of centuries, the Enlightenment doctrine of progress imagined the golden era in the future. As human life seemed to improve (or was said to be improving) through new systems of governance and technology, life would generally become better and better. We have now reverted to what has been the norm for most of our history, an assumption that golden ages lay in a mythic past.

The political and social status quo is increasingly seen as having failed to deliver. Life is not better than it was—and it is not getting better—for most people. They do not believe that the lives of their children will be better than their own. In fact, they increasingly just “don’t believe” in the current system, wherever they live and whatever the system is. When I presented the television series A World on the Brink in 2017, I found that there was one phrase with which everyone agreed, regardless of where they lived: “what we have is not working.” That was already 7 years ago! Since then, the needs and concerns of most peoples have really not been addressed.

The bottom line is this: conditions have changed radically; whatever happens next, they are going to change even more. The answers are unlikely to be found in any of the dominant political systems of the past few centuries. We need to think again and we need to think quickly. We need to come up with new approaches that are relevant and adaptive to the very different age we are living in and the even more different ages that are emerging. I say “approaches” because need to give up on universalism — there can be no universal system that will fit the bill, or so it seems. There may well be, and will probably be, many different and divergent systems in different places and for different people.

But they won’t be like it is now, or like it was. And that is hard.

The European Union's Right-Wing Future

Elections for the European Union’s parliament more than confirmed predictions of a nationalist rise and of a decline in support for environmentalist parties. The initial reaction was nonetheless one of shock, a reaction compounded by French President Emmanuel Macron’s surprise decision to dissolve the National Assembly and force an election as a sort of referendum on French extremism. (“The rise of nationalists, of demagogues, is a danger for our nation but also for our Europe, for France’s place in Europe and in the world,” Macron declared.) News cycles being what they are, there then followed a calming line of argument that emphasized European Commission President Ursula von der Leyen’s insistence that “the center is holding.” Finally, the argument was made that the center might be holding for now but the mainstream political groupings that provide that center need to change course now, before the political support for European union really does decline.

SIG’s view is that the European parliamentary election results fundamentally reflect the victory of economic concerns over moral ones. The project of European unity has always had a moral proposition at its core: that nationalist competition within Europe leads to war, and therefore European unity is a project of peace. European unification since the 1940s has been animated by a sense that it was morally superior to all the political alternatives. For a number of reasons, that sense of moral direction is being lost.

One reason is the structural problem of democratic representation. The “democratic deficit” of the European Union and its predecessors has been a chronic complaint that has been ameliorated in various treaties but cannot be entirely resolved. National governments are more truly representative and therefore more legitimate than the delegations each member state sends to Brussels/Strasbourg.

The political response to this has been twofold. The first response is to reject the EU as unrepresentative and unaccountable and revive the nation-state as the best available alternative. Alice Weidel, of the German party Alternative für Deutschland (AfD), put it with characteristic bluntness: “We’ve done well because people have become more anti-European.” AfD recorded its best performance yet in European elections, moving into second place ahead of Germany’s current governing party.

The second response has been to increase the power of the European Commission and its president, that is, to increase the power of the European executive. On the face of it, this would seem to be the opposite of democratic: the empowerment of a very indirectly elected president and of commissioners approved by her after being proposed by national governments. But the rise of the Commission was in response to a strongly felt political need, during the 2007-08 financial crisis and the euro crisis that followed, for there to be greater power in Brussels. This was not a reward for Brussels’s political successes. Rather it was a response by the European political class to the inability of national governments to solve the financial crisis on an individual basis — and to the realization that if Brussels were not strengthened Germany, because of its economic dominance, would come uncomfortably close to being master of Europe. Then-Chancellor Angela Merkel shepherded a process by which German power was both acknowledged and contained within the reforms of the 2009 Treaty of Lisbon. Since 2019, President von der Leyen, who rose to prominence as a long-serving member of Merkel’s government, has enlarged the Commission’s effective power, pushing forward policies on the environment, defense, technology, competition policy, foreign policy, agriculture, the euro, and much else. Her presidency has made the EU more effective and thereby more worth voting about. The turnout last week was the highest in 30 years. In that quite real sense, the democratic deficit is shrinking.

However, if the European Union has become more responsive to voter needs since 2019 and a more plausibly effective companion to member states’ national governments, it has also become a prosecutor of war (in Ukraine), raised the barriers to immigration, and utilized regulatory, competition and other industrial policies as weapons against, principally, the US and China, though also Russia. In short, the EU is losing that sense of peace-loving, internationalist moral distinction that differentiated it from the patriotic model of nationalism it was invented to replace. The EU is becoming a center-right power tolerant of illiberal identitarian and economic policies and engaged in war.

The consensus opinion has been that the European parliamentary elections were a struggle between a morally legitimate, internationalist center and a demagogic, nationalist right surging upward from the murk of history. What seems more likely is that the EU is becoming a political manager for a European nationalism that can be relatively at ease with the sub-European nationalisms currently thriving in Germany, the Netherlands, Austria, Italy, Belgium and France. Austria aside (and adding Luxembourg), that has been the core group of European unification since 1951. It may prove to be the core of a right-leaning Continent.