Oct 30, 2018

Axios Future

By Bryan Walsh
Bryan Walsh

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1 big thing: A different BRICs

Bolsonaro’s supporters celebrate. Photo: Sergio Lima/AFP/Getty Images

On Nov. 30, 2001, Jim O'Neill, chief economist at Goldman Sachs, released a 16-page white paper declaring a new geo-economic bloc that he said would supplant the current world order. If you were an investor, "BRIC" — Brazil, Russia, India and China — was the way to go.

  • Almost exactly 17 years later, the BRICs are emblematic of a very different world, but not the one O'Neill foresaw — one that is autocratic, nationalist and turbulent.

The big picture: When O'Neill made his pronouncement, it caught fire. It was regarded as brilliant, and O'Neill himself as a seer. The world was still seven years away from the financial crash, but somehow it seemed right, as O'Neill proposed, that two of the G-7 nations step aside to make way for a future G-9 that would include all of the four newcomer economic giants.

But that is not what has happened: Only China took on the economic stature that O'Neill described, becoming central to the global economy. India has grown fast as well, but it has not become a global engine.

  • Meanwhile, politically, the states have rejected Western democracy: Russia's Vladimir Putin has doubled down on autocracy. India's Prime Minister Narendra Modi is a right-wing Hindu nationalist. China's Xi Jinping is the most power-obsessed leader since Mao.
  • And yesterday, Brazilians elected their own new nationalist leader: Jair Bolsonaro, a crude-talking hybrid of President Trump and the Philippines' Rodrigo Duterte, insulting minorities, championing torture and vowing to kill his way to less crime.
  • It is a dimension of the global autocratic wave, made up of nations exasperated with perceived venality and welcoming a big personality to assert control.

"Brazil is deteriorating badly in the wake of massive corruption, out of control crime, a bloated public sector and high inequality," Richard Haass, president of the Council on Foreign Relations, tells Axios. 

In the glare of a history, the BRICs seem to some like a mere bumper sticker.

  • "BRIC is an empty concoction, of almost no meaning, a largely Chinese political myth," says Charles Hill, a former senior diplomat and now professor at Yale.

What's next: The BRICs, which later added South Africa, making the name BRICS, from the outset saw themselves as a political and economic counterweight to the Western order. Now, however, they align with the global trend, says Ivo Daalder, president of the Chicago Council on Global Affairs. That gives more force to the global trend challenging the post-WWII order.

"The BRICS are a source of ‘alternative’ international institutions to the U.S.-led liberal international order."
Harold Trinkunas, a professor at Stanford University

The bottom line: Despite their failure to coalesce as O'Neill forecast, what the BRICs do — and what happens to them — is important. BRICS as it's known could itself fall apart, since Bolsonaro "is much more anti-China than any of Brazil’s recent presidents," said Trinkunas.

  • The broader issue is the vacuum of global leadership, of which the BRICs failure is part, says Ian Bremmer, president of the Eurasia Group, "making tail risk outcomes (like war) more likely."
  • "Since we are talking about one-third of the planet’s population," Haass says, "the stakes could hardly be higher."
2. Indebted dropouts

Photo: Sebastian Gollnow/Getty

America's massive student debt problem is slowly getting better, but thousands who took on big loans but never graduated still have little chance of escaping the morass.

  • Writes Axios' Erica Pandey: These individuals are at an impasse — many want to graduate so they can qualify for higher-paying jobs and pay down debt, but they can't go back to school until they pay off existing loans.

By the numbers: The Institute for College Access and Success (TICAS), a non-profit advocacy group, did an analysis of all U.S. undergraduates who started college in 2003 or 2004:

  • 11% of them dropped out with debt.
  • 42% of the dropouts attended for-profit colleges, and 47% public universities.
  • 23% of them are African-American; that compares with 14% of all American students who are African-American.

Overall, the nationwide student debt burden is beginning to shrink as a proportion of household income, reports Axios' Felix Salmon. And for the first time since the 1980s, tuition inflation is lower than the rise in consumer prices.

  • Some good news: Americans who accrue the most student debt tend to be doctors, lawyers and other professionals — those most likely to be able to pay it off.
  • Yes, but: For those who don't complete college, even relatively small debt, like $5,000, can be insurmountable, says Diane Cheng, a researcher at TICAS.
3. AI against sepsis

A sepsis training demonstration using a dummy. Photo: John Leyba/The Denver Post/Getty

Researchers have developed a machine-learning tool that could improve the treatment of sepsis, a blood infection that can shut down vital organs and is a leading cause of death in the U.S., killing nearly 270,000 people a year.

Axios' Eileen Drage O'Reilly reports: The Artificial Intelligence Clinician tool, which has only been used in a lab setting, matches sepsis patients across a database of prior cases to advise doctors on the best treatment, according to a new report published in Nature Medicine.

In sepsis, an infection triggers a bodywide immune response that can be lethal. Treatments usually include a regimen of antibiotics, intravenous fluids and sometimes a vasopressor drug to raise blood pressure, but timing and the amounts can be tricky to determine.

The researchers had AI Clinician examine data from 96,000 patients in hospital intensive care units.

  • 48 variables were isolated for each patient, including demographics, vital signs, age and what fluids or vasopressors were already administered.
  • When the AI was applied, it improved treatment over time by learning from the prior cases, determining the best amount of fluid to administer and when to give the vasopressor.
  • Patients receiving the AI-suggested treatment had a lower mortality rate than those who followed only a doctor's advice. "Improving treatment even by a couple percentages will save tens of thousands of lives each year," says co-author Anthony Gordon of the Imperial College London.

Danny McAuley of Queen’s University of Belfast, who was not part of the study, says the algorithm needs to be tested in real time:

"These are simulations. They look very encouraging but of course this will need further testing in clinical trials like all new treatment strategies."

4. Worthy of your time

Illustration: Rebecca Zisser/Axios

Signs the economy and stocks have peaked (Jon Hilsenrath, Harriet Torry — WSJ)

The case against ExxonMobil (Ed Crooks — FT)

The great auto disruption (Joann Muller — Axios)

Meet Nobel laureate Jim Allison (Charles Graeber — Wired)

China is already the center of global change (The Economist)

5. 1 fun thing: A Gen Z Christmas

Tree lighting at New York's Rockefeller Center. Photo: Jemal Countess/Getty

Forget wealthy parents with fat wallets or rich millennials in big cities. This holiday season, the smartest retailers will be focusing on the 15-year-olds, reports Retail Dive.

Erica reports: Unlike their older siblings and parents, Gen Z consumers prefer shopping brick and mortar than going online. These young shoppers, if successfully courted by retailers, have the potential to revitalize physical stores and save dying malls.

The big picture: Gen Zers will soon be the largest-ever cohort of shoppers.

  • They already control about $143 billion of consumer spending.
  • A whopping 95% said they've visited a mall in the past three months. Compare that to 75% of Millennials and 55% of Gen Xers.

When it comes to shopping for holiday presents, Gen Zers love giving experiential gifts, like cooking classes or trips, per Retail Dive. And when they do give physical gifts, they prefer buying them at stores with experiential elements.

  • Think in-store basketball courts or pop-up restaurants between towering shelves of inventory. These concepts, which have become very popular in hip neighborhoods like New York City's SoHo, are drawing Gen Z shoppers in and keeping them around longer.
Bryan Walsh