Philippa Kaur

The Economist is looking to hire a global business writer, ideally based at first in London. The writer will be expected to provide thematic features that range across industries and geographies. Examples of recent thematic coverage are below. The job includes writing leaders and appearing on podcasts, films and at Economist events. Journalistic experience is not necessary. The ability to write clearly and entertainingly is crucial, as are strong analytical skills, a high degree of financial numeracy and an ability to work with data. To apply, please send a CV and a sample article, suitable for publication in The Economist, to: [email protected]. It should be unpublished and no longer than 700 words. The deadline is February 25th.Example coverageWhy businesses are furiously hiring even as a downturn loomsMultinational firms are finding it hard to let go of ChinaWhat big tech and buy-out barons have in common with GEA sleuth’s guide to the coming wave of corporate fraudWhat went wrong with Snap, Netflix and Uber? More

Technology and business are inextricably linked. Entrepreneurs harness technological advances and, with skill and luck, turn them into profitable products. Technology, in turn, changes how firms operate: electricity enabled the creation of larger, more efficient factories, since these no longer needed to depend on a central source of steam power; email has done away with most letters. But new technologies also affect business in a subtler, more profound way. They alter not just how companies do things but also what they do—and, critically, what they don’t do.The history of capitalism is a story of such reorganisations. The Industrial Revolution put paid to the “putting-out system”, in which companies obtained raw materials but outsourced manufacturing to self-employed craftsmen who converted these into finished products at home and were paid by output. Instead, factories strengthened the tie between worker, now employed directly and paid by the hour, and workplace. The telegraph, telephone and, in the 20th century, containerised shipping and better information technology (IT), have allowed multinational companies to subcontract ever more tasks to ever more places. China became the world’s factory; India became its back office. Nearly three years after the pandemic began, it is clear that technology is once again profoundly redrawing the boundaries of the firm.In the rich world, fast broadband internet and new communication platforms like Zoom or Microsoft Teams mean that a third of working days are now done remotely. Jobs are trickling out from corporate headquarters in metropolises to smaller cities and towns. And the boundary between collaborating with a colleague, a freelance worker or another firm is blurring. Companies are drawing on common pools of resources, from cloud computing to human capital. By one estimate, skilled freelance workers in America earned $247bn in 2021, up from about $135bn in 2018. The biggest firms in America and Europe are becoming more reliant on outsourcing white-collar work. Exports of commercial services from six large emerging markets have grown by 16.5% a year since the pandemic began, up from 6.5% before it (see chart 1). On January 9th Tata Consultancy Services (TCS), an Indian IT-outsourcing giant, is expected to report another bump in profits. On Coase inspectionA useful lens for understanding these changes was offered by Ronald Coase in his ground-breaking paper from 1937 entitled “The nature of the firm”. Stay small and you forgo the efficiency afforded by scale. Grow too big and a business is too unwieldy to manage—think of Soviet-style command-and-control economies. Most commerce happens in between those extremes. But where on the continuum? Coase, whose insights earned him a Nobel prize in economics, argued that firms’ boundaries—in other words, what to do and what not to do yourself—are determined by how transaction and information costs differ within firms and between them. Some things are done most efficiently in house. The market takes care of the rest.For example, between the 1980s and the 2010s, globalisation and the IT boom boosted economies of scale and, as a result, encouraged market concentration. But the two factors also increased competitive pressures and reduced the cost of communication and collaboration between firms. This caused companies to shrink their scopes. In research published last year Lorenz Ekerdt and Kai-Jie Wu of the University of Rochester found that the average number of sectors in which American manufacturers were active fell by half between 1977 and 2017. By the 2000s many sprawling industrial conglomerates like Germany’s Degussa, which had a hand in everything from metals to medicine, or British Aerospace, which was dabbling in automobiles, had unwound themselves and picked the knitting to stick to (chemicals and aircraft, respectively). Today Coasean forces are ushering in a new type of corporate organisation. It resembles a 21st-century putting-out system—not for artisan craftsmen but for the sort of white-collar professionals who epitomise modern Western economies. Micha Kaufman, boss of Fiverr, an Israel-based marketplace which matches freelance workers with corporate clients around the world, observes that firms are getting better at measuring workers’ performance based on their actual output rather than time spent producing it. This is true both of employees and subcontractors. The result is a reorganisation of businesses both internally and in relation to other companies in the economy.Start on the inside. Using data from America’s Quarterly Census of Employment and Wages, The Economist has examined jobs in three sectors particularly compatible with remote work: technology, finance and professional services. Our analysis finds that such jobs have become far more distributed across America since the pandemic. Big metropolitan areas have lost out to smaller cities and even the countryside (see chart 2). Since the fourth quarter of 2019, the number of jobs in the three sectors has grown by five percentage points more in rural areas than in San Francisco and New York. Firms are also distributing work across more borders, often in new ways. Oswald Yeo, who runs Glints, a recruiting startup in Singapore, says that his firm hires employees in batches by country. That helps the new recruits from Indonesia, say, form in-person connections with colleagues there, while expanding Glints’s talent pool, Mr Yeo explains. There is a premium for locations without a big time difference because, as a study last year from Harvard Business School found, cross-border teams collaborating on non-routine tasks often work into their leisure time in order to work synchronously with colleagues in different time zones. In Glints’s case, that is places like Indonesia. For American companies, it is increasingly Canada. Microsoft, which opened its first Canadian office in 1985, created a big new one in Toronto in 2022. Google is tripling its Canadian workforce to 5,000. A study last year by CBRE, a property firm, of the 50 cities in America and Canada with the most tech workers found that four of the top ten were Canadian. Together, the four added 180,000 tech jobs between 2016 and 2021, an increase of 39%. By comparison, the top four American cities gained just 86,000 jobs, or 8%, over the same period. Lower costs doubtless helped; the Canadian quartet were among the 16 cheapest cities among the 50, as measured by housing costs.Barriers to immigration are another factor forcing firms to look abroad, says Prithwiraj Choudhury of Harvard Business School. Mr Choudhury has documented a growing class of firms that help employers forge stable relationships with overseas employees without hiring them directly. One example is MobSquad, a firm that recruits skilled workers unable to obtain visas to America and employs them in Canada instead. Its American clients include Betterment, an investment firm, and Guardant Health, a biotechnology company.MobSquad’s recruits sit somewhere in between outsourced temps and full-time employees. This sort of arrangement points to the bigger Coasean shift—to how firms demarcate which tasks they perform on their own account and which they subcontract. A survey of nearly 500 American firms conducted by the Federal Reserve Bank of Atlanta in August 2022 found that 18% plan to use more independent contractors; only 2% said they would use fewer (see chart 3). On top of that, 13% want to rely more on leased workers, compared with 1% who want to reduce this reliance. MBO Partners, a workforce-management firm, estimates that the number of American workers engaging in independent work for at least 15 hours a week increased from 15m in 2019 to 22m in 2022. Official figures from the Bureau of Labour Statistics are more conservative, but still show that nearly 1m more Americans are self-employed than at the start of 2020. Pandemic-era job losses forcing people into less desirable work arrangements cannot be the whole story; a similar surge in self-employment did not occur after the global financial crisis of 2007-09. The shift is once again enabled by technology, such as the proliferation of platforms for all manner of freelance work. Having grown slowly, from 9% of America’s labour force in 2000 to 11% in 2018, self-employment is becoming much more common. Gig work is no longer the preserve of ride-hailing or food delivery. Whereas earlier freelance platforms, such as Taskrabbit, focused on routine tasks, emerging new ones increasingly recruit freelance workers for complicated work. Upwork specialises in web development; Fiverr is known for media production. Amazon turned to Tongal, another freelancing platform, when it needed a team to rapidly produce social-media content for its Prime TV shows. Besides making it easier for companies to rely on non-employees, technology is enabling new ways of collaboration between businesses. In 2020 Slack, the messaging platform of choice at many a firm, launched a feature that allows users to communicate directly with other companies as they can within their own organisations. More than 70% of companies in the Fortune 100 list of America’s biggest firms by revenue use the feature. The Atlanta Fed’s survey found that 16% of responding firms were planning to increase domestic outsourcing and 12% envisioned more offshoring. Already, combined revenues for six big IT-services firms with large operations in India—Cognizant, HCLT, Infosys, TCS, Tech Mahindra and Wipro—grew by 25% between the third quarter of 2019 and the same period last year (see chart 4). Pinning down just how much firms depend on outsiders is tricky—companies do not advertise this sort of thing. To get an idea, Katie Moon and Gordon Phillips, two economists, look at a firm’s external purchase commitments in the upcoming year as a share of its cost of sales. As a snapshot of the economy, this measure of “outsourcing intensity”, as Ms Moon and Mr Phillips call it, must be treated with caution; it does not capture all types of outsourcing and different firms account for external purchases in different ways. But it usefully illustrates changes over time.The Economist has calculated the measure using data from financial reports for a sample of large listed firms from America and Europe (see chart 5). We find that companies are indeed growing more reliant on others. Average outsourcing intensity across our sample has nearly doubled from 11% in 2005 to 22% in the most recent year of data (either 2021 or 2022). This growth is especially pronounced among tech titans such as Apple and Microsoft; businesses that grew little over the analysed period, such as Unilever, a British consumer-goods giant, saw only small increases. This is consistent with research which finds that as firms grow ever larger and adopt more technologies, thus becoming more complex and unwieldy, they outsource more operations—precisely as Coase would have predicted. As technology evolves, the contours of the firm will continue to be redrawn. The result is that companies have greater flexibility to seek out new workers for new tasks in new places. Portugal has created a special visa for digital nomads, who will be able to work from the country for a year. Argentina wants to introduce a preferential exchange rate for freelance workers selling their services abroad: the “tech dollar” would ensure that they will not be exposed to the rapidly devaluing peso. For Western white-collar types, this stiffer competition for work may translate into compressed wages. According to a working paper published last year, by Alberto Cavallo of Harvard Business School and colleagues, wages differ less between countries for occupations that are more prone to outsourcing. For the global economy, though, it means greater efficiency and, hopefully, faster growth and higher living standards. And for Coase, it means continued relevance. ■ More

Many will have seen TV footage of woebegone travellers unable to visit their families during the holidays because of a cyclone-induced meltdown at Southwest Airlines, America’s largest domestic carrier. Very few, however, know about the travel hell just south of the border at Tijuana airport, due to fog-induced mayhem at Volaris, a low-cost carrier that is Mexico’s largest airline. Your columnist does. He and Mrs Schumpeter spent much of Christmas Eve, Christmas Day and Boxing Day stranded there along with thousands of other travellers, trying to rebook cancelled flights to destinations across Mexico. For most of the time, resignation not rage prevailed. But yuletide cheer did fade when, after standing in line for 11 hours to rebook tickets, people were told by a Volaris representative they were in the wrong queue. At exactly the same moment, the company sent out a seasonal tweet: “The magic of Christmas extends to the whole Volaris family.” Listen to this story. Enjoy more audio and podcasts on More

It is the stuff of parental nightmares. Between July and October 70 children in Gambia died of kidney failure. In December 18 perished in Uzbekistan from renal problems and acute respiratory disease. In both cases Indian-made cough syrups may have been at fault, according to allegations by a Gambian parliamentary committee and the Uzbek authorities. Listen to this story. Enjoy more audio and podcasts on More

After Tesla’s market capitalisation swept past that of Toyota, then the world’s most valuable carmaker, in the summer of 2020, devoted fans and incredulous sceptics deployed a new unit of measurement. As the electric-vehicle (EV) champion’s share price rose, its worth was couched in terms of the combined value of the next two, then five, then ten biggest carmakers. A year ago Tesla’s market value surpassed $1.2trn, more than most other car firms put together. Since then it has lost 72% of that—a sum likewise exceeding the value of most of the industry. The fortune of its mercurial boss, Elon Musk, has shrivelled by more than $200bn as a result.The latest blow came on January 3rd, after Tesla missed analysts’ expectations for deliveries for the third quarter in a row and reported that the gap between production and deliveries had grown, suggesting softening demand for its EVs. It lost 12% of its value—roughly $50bn, or one Ford Motor Company—in a day. Even bullish investors now doubt that Mr Musk will fulfil his promise of making 20m cars a year by 2030, or that Tesla’s ”Autopilot” is close to becoming a world-changing fully autonomous driving system. Yet the main reason for the market’s recalibration of Tesla’s prospects is a dawning realisation that the company is chiefly a carmaker—and that its boss is not superhuman.Mr Musk has always regarded his company as a tech firm, a peer of digital giants like Alphabet, Apple or Meta, not of old-economy metal-bashers such as Toyota or Volkswagen. For a time, so did the market—first as tech shares soared amid the pandemic-era boom in all things digital, then as they slumped last year, after their growth began to slow and higher interest rates made their promised future profits look less valuable today. In the past few months, however, Tesla’s share price has suffered a sharper correction than big tech. This has coincided with its more mundane tribulations as a car business. Having managed to avoid the worst of the pandemic supply-chain disruptions, Tesla has been caught up in China’s chaotic retreat from its zero-covid policy; its big factory in Shanghai has been hit by virus-related shutdowns. And having set the course for the industry’s EV transition, it now faces plenty of competition from established rivals and a host of newcomers it inspired. Days after Tesla reported the disappointing figures Volkswagen unveiled its id.7, a challenger to Tesla’s entry-level Model 3 saloon. EV-buyers, for their part, are becoming less willing than early adopters to overlook Tesla’s questionable build quality and the interior of a much cheaper car. And the natural Tesla-owners among the wealthy progressive set are less prepared to overlook Mr Musk’s libertarian antics at Twitter, which he bought in October and has mismanaged with gusto—especially now that they have plenty of conscience-salving EV alternatives to choose from.Tesla is, in other words, no longer the only game in town—and certainly no tech behemoth. As EV-makers go, though, it still looks impressive. In 2022 it delivered 1.3m cars, 40% more than the year before, and opened two new assembly plants. It is working on a smaller, cheaper car and this year will start to deliver its long-awaited Cybertruck pick-up. And it is still worth $340bn—nearly as much as the next three biggest carmakers combined. ■ More

It’s the first full working week of 2023. You have two new year’s resolutions. First, to turn yourself into a humming machine of productivity. No more procrastinating, no more afternoon naps. Second, to maximise your own sense of well-being. A few days in, and your daily journal bears witness to a changed person, a model of self-caring efficiency. 07:00: Go to the gym. Leave phone at home. Mens sana in corpore sano.08:00: Tell au pair to wake children, and to keep them out of your way.08:15: Listen briefly to the call of a whale on Spotify. Shower. Dress.08:30: Eat something with chia seeds. 08:40: Remove chia seeds from teeth.08:58: Enter home office. Great sense of wellness. Never felt weller.09:00: Turn phone off aeroplane mode and start laptop. Phone goes mad: missed calls, Slack messages, texts. Precisely where the day went wrong in the bad old days of 2022. Use new batching technique: respond to the oldest five emails and ignore everything else. Turn notifications off again.09:30: Make a list of tasks that need to be completed today. Colour-code those tasks according to priority. Chunk each of the high-priority tasks into discrete segments. Use combination of time-boxing and Pomodoro techniques to put them into the calendar for the day ahead.10:30: Calendar for the day is now complete. Very full few hours ahead. Get up and go for a walk around the block to avoid musculoskeletal problems. Every so often stop and look 20 yards into the distance to maintain eye health. See friend on street.11:30: Back at desk. Decide to find a “Study with Me” video, a recording of someone else working at their desk, as extra motivation for the day to come. Very effective technique, just need to choose the right recording. Might have one with rain pattering on the windows. Or a cat sleeping. Or logs on a fire.12:00: “Study with Me” recording is now playing. Went with the cats. Day is slightly off-track now. Begin first 25-minute Pomodoro session. 12:25: Excellent session. Get up. Stretch.12:30: Second Pomodoro session begins. Lasers are less focused than me. 12:40: Extremely bored. Try to get onto Wordle but have installed blocker on laptop that means I cannot use the site until 18:00. Only way round this is to change the time on the computer. Not sure how to do this but it cannot be that hard. 13:30: It is quite hard. But Wordle is done (in four tries!). Clock on computer is now totally wrong; saying it is 2024. Just need to change it back. 14:00: No time for second email-batching session. Lunch and well-being hour begins an hour late. Make open sandwich with rye bread, salmon, dill. Use stacked-habits advice to do two mindfulness exercises at once: self-administer head massage while listening to soundtrack of grasshopper noises. 15:00: Activating hermit mode. Ditch Pomodoro technique: need to get at least two hours done before final email-batching session. Use timer tab to set countdown clock going on my browser. 15:30: Not made great progress. Feeling a bit worthless. Open the compliments folder in my email inbox to remind myself of praise I have received from colleagues in the past. 15:45: Starting to feel a bit panicky. As last resort use “Write or Die”, an old program that starts deleting your work if you have not met targets for word count. Helps just to get something on the page. 16:15: FFS. Child came in with something hairy (a rat? someone else’s hair?) glued to her hand. By the time I had shooed her out, “Write or Die” had erased most of what I had got done. 17:00: Have used child’s stencil set to make a very professional poster that says “Do not enter: I am working”. I will paste it on my door here. Good to get this done. Need a pick-me-up, so am going to attend laughter-therapy session that the company has been advertising. 17:30: Couldn’t get sound to work for some reason. Everyone looked completely mad on the laughter-therapy thing. Have logged the problem with IT.17:45: Third (well, second) email-batching session begins. Notifications back on, and email opened. Torrent of messages. Four calls from my boss. Hard to tell what is going on, but everyone seems upset that I have been consciously prioritising work. Typical. 18:00: Ring boss. I have until 9am tomorrow morning to get something done for a new client. Feel much better. If only people could just set me an urgent deadline every day. More

PICTURE A MECCANO set, but one made for gods. Blades as long as Big Ben is tall, rotors and tower sections the size of school buildings, shafts and generators so heavy they must be rotated every 20 minutes so as not to be crushed by their own weight: all these parts are strewn across an area the size of 150 football pitches. Clicked together, they form edifices rivalling the Eiffel Tower, except more useful—wind turbines to be planted somewhere in the North Sea.Welcome to Esbjerg, the hub of Europe’s offshore-wind industry. Two-thirds of the turbines currently spinning off its coast, enough to power 40m European homes, were put together in the Danish port town of 72,000. And Esbjerg’s gods have only started tinkering. The city’s port operator plans to nearly triple capacity to handle wind projects by 2026. Local engineering firms that once catered chiefly to the fossil-fuel industry now supply the windpower industry instead. Meta has bought 212 hectares of farmland outside Esbjerg to build a renewables-powered data centre for its social networks. Out on the sea, cables that will ferry 30% of the international data traffic into Norway are being laid down. Esbjerg’s mayor has travelled as far as Vietnam and Washington, DC to share its success story. With a dose of strategic thinking, and a bit of luck, a constellation of Esbjergs could combine and scale up into a new North Sea economy. This would help Europe achieve its ambitious climate goals and rebalance its energy sources away from countries ruled by tyrants such as Russia’s Vladimir Putin. Its newly minted corporate champions could offer Europe’s best, and perhaps last, chance to stay globally relevant. And it could alter the continent’s political and economic balance by creating an alternative to the sputtering Franco-German engine.The North Sea has always been economically important. Bordered by six European countries—Belgium, Britain, Denmark, Germany, the Netherlands and Norway—it is where many important shipping routes intersect. Its strong tides, which sweep nutrients to its shallow seabed, are a boon for fishermen. In the 20th century oil and gas were discovered beneath the seabed. At their peak in the 1990s Britain and Norway, the two largest North Sea producers, together cranked out 6m barrels a day, half as much again as the United Arab Emirates does today. One Scottish field, Brent, lent its name to the global price benchmark. Now as that bounty runs out—and demand for what remains dwindles because of growing concerns about climate change—the turbulent body of water is finding lucrative new uses. Spin doctrineThe biggest bet is on a resource of which the sea has an infinite amount—awful weather. With average wind speeds of ten metres per second, the basin is one of the gustiest in the world. The day your correspondent visited Esbjerg speeds were twice that, enough to push the wholesale price of electricity down to nearly zero. The North Sea floor is mostly soft, which makes it easier to affix turbines to the seabed (the floating kind have yet to be deployed at scale anywhere in the world). It is also typically no more than 90 metres deep, which allows wind farms to be placed farther away from the coast, where winds are more consistent. Ed Northam of Macquarie Group, an investment firm with stakes in 40% of all British offshore wind farms in operation, says his offshore turbines work at up to 60% of capacity, compared with the 30-40% that is typical onshore. In 2022 North Sea countries auctioned off 25 gigawatts (GW) in capacity, making it the busiest year by far. Nearly 30GW-worth of tenders have already been scheduled for the next three years. Yearly new connections are expected to grow from under 4GW today to more than 10GW by the late 2020s. At a meeting in Esbjerg in May the European Commission and four countries bordering the North Sea agreed to install 150GW of windpower by 2050, five times Europe’s and three times the world’s current total. In September this group and another five countries raised the number to 260GW, equivalent to 24,000 of today’s largest turbines. This ambition is made possible by wind’s version of Moore’s law, which described the exponential rise in computing power. Three decades ago the world’s first offshore wind farm—Vindeby in Denmark, made up of 11 turbines—had a total capacity of five megawatts (MW). Today a single turbine can generate 14MW, and one farm may contain more than 100 of them. More robust cables and transformers at sea to convert windpower from alternating into direct current, which can travel over long distances without big losses, enable more electricity to be generated farther away.The result is that several wind farms being installed now surpass 1GW in capacity, the typical output of a nuclear plant. The Dogger Bank wind farm, located between 130km and 200km off the British coast and due to start operating in the summer of 2023, will clock in at a record 3.6GW at full capacity in 2026. Economies of scale are driving down costs, making offshore wind competitive with other sources of power. In July Britain awarded contracts to five projects, including Dogger Bank, at a price of £37 ($44) per megawatt-hour—less than a sixth of the country’s wholesale electricity price in December.The awful weather is not always a boon: its vagaries can also stress the grid. Helpfully, technology and falling costs are allowing windpower operators to combat the elements. One way to do this is with more interconnections, first between the farms and land—today most wind farms have one link to the shore, which is inefficient—then among the farms themselves. Half of the 3GW to be tendered by Norway will have the option to create links to more countries. Phil Sandy of National Grid, which runs Britain’s power infrastructure, predicts a future of complex undersea grids similar to that on land. Another way to manage the variability of windpower is to use it to split water molecules to produce “green” fuels, such as hydrogen and ammonia. In May the European Commission and heavy-industry bosses pledged a ten-fold increase of EU manufacturing capacity for electrolysers, which do the splitting, by 2025. This would allow it to produce 10m tonnes of green fuels by 2030. The commission has also proposed a “hydrogen bank”, capitalised with €3bn ($3.2bn), to help finance the projects. Investors are giddy. In August Copenhagen Infrastructure Partners (CIP), a private-equity firm, said it had raised €3bn for a fund that will invest solely in hydrogen assets. A dozen projects have been announced in Europe; the three largest together amount to 20GW of green power. Topsoe, a Danish firm that provides technology for such ventures, says its orders add up to 86GW.Eventually the North Sea’s power system could take the form of an archipelago of “energy islands” that host wind-farm repair staff, aggregate electricity and produce hydrogen in bulk, to be transported onshore by ship or pipeline. As many as ten such schemes are being considered, according to SINTEF, a research firm. North Sea Energy Island, an artificial atoll 100km off the Danish coast, is due to be tendered in 2023. It will serve as a hub for ten surrounding wind farms, with links to neighbouring countries. One bidder, a joint venture between Orsted, a Danish offshore wind developer that is the world’s largest, and ATP, a local $150bn pension fund, envisages a modular design, with components made onshore and assembled at sea. “We expect it to still be functional in 100 years’ time,” says Brendan Bradley of Arup, an engineering firm that is advising the bid. Thomas Dalsgaard of CIP, which is part of a rival consortium, reckons that producing green fuels offshore will not only help reduce pressure on grids but also save money: hydrogen pipelines are one-fifth the cost of high-capacity power-transmission lines.Grids unlockedThere is more to the new North Sea economy than the energy sector. For electricity and hydrogen will not be the only things to be coursing across the North Sea floor. So will carbon dioxide. Some industries, such as cement-making or chemicals, are hard or impossible to decarbonise. But their CO2 can be collected and pumped into depleted gasfields in the North Sea. Such carbon capture and storage (CCS) used to seem an unappealing way to fight climate change, because of its high cost and unpopularity among environmentalists, who worry it would prolong the life of fossil fuels. Now, as with wind, the costs are falling, political resistance easing and projects multiplying. One seeking approval in Rotterdam, called Porthos, would connect Europe’s biggest port via a pipeline to a compressor station, and then out to an empty offshore gasfield. Although a court recently delayed its start, the project has already received the green light from Dutch regulators. Once operational, it would take in about 2.5m tonnes of CO2 annually for 15 years, nearly 2% of Dutch carbon emissions. The port of Amsterdam is planning something similar. Farther north, near the Norwegian city of Bergen, Equinor, an energy company, and its partners have already finished drilling operations for a CO2 injection well as part of a project called Northern Lights. According to Guloren Turan of the Global CCS Institute, a think-tank, Europe now has more than 70 such facilities in various stages of development.The last valuable product increasingly criss-crossing the North Sea is information. If you follow one of the newer transatlantic submarine data cables that land in Esbjerg, called Havfrue, and then turn right at a fork in the middle of the North Sea, you end up in Kristiansand, a city in southern Norway. It is the home of N01 Campus, the “world’s largest data-centre campus powered by 100% green energy”, according to its owner, Bulk Infrastructure. “We want to build a platform for sustainable digital services,” says Peder Naerbo, the firm’s founder.North Sea countries are an excellent place to store and process data. Low electricity prices make for cheaper number-crunching, which is energy-intensive. A cold climate means data centres can be cooled just by circulating outside air instead of using costly cooling systems. The region boasts a highly skilled workforce, stable institutions and some of the world’s most enlightened data laws. Latency, the time it takes to move data in and out of the computing clouds, is becoming less of a problem as the technology improves, so digital workloads can be processed in ever more far-flung facilities. And data centres are hitting limits elsewhere in Europe. In 2021 Irish data centres and other digital uses consumed 17% of the country’s power. To prevent blackouts, EirGrid, a state-owned Irish utility, will no longer supply electricity to new server farms.According to TeleGeography, a data provider, 13 new cables have been installed in the North Sea since 2020, compared with five in all of the 2010s. Data centres, too, are springing up, as big cloud providers vow to decarbonise their supply chains. Amazon Web Services (AWS) and Microsoft Azure, the two largest cloud providers, have built server farms in the Nordics. Meta has its plot outside Esbjerg. Older industries are also moving more of their computing north. Mercedes-Benz and Volkswagen have computers sitting in former mines in Norway; these simulate wind-tunnel and crash tests for their cars. On average, estimates Altman Solon, a consultancy, demand for data centres in the Nordics will grow by 17% a year until the end of the decade.Go north, old industrialistMore European economic activity could be drawn north. “Abundance of energy tends to attract industry,” says Nikolaus Wolf, an economic historian at Humboldt University in Berlin. That is what happened in the early 19th century, when abundant hydropower helped attract the cotton industry to Lancashire. Mr Wolf and Nicholas Crafts of the University of Warwick calculate that a 10% decline in Lancashire’s hydropower would have led to a 10% decline in textile employment by 1838 in key places.Energy is easier to distribute via grids and pipelines today than it was in the Industrial Revolution, and existing industrial centres across Europe exert their own pull. Transplanting cement-making kilns to North Sea shores would mean transporting limestone to them and cement back to customers, making the process uneconomical (and, until the advent of zero-emissions lorries, climate-unfriendly). Giant steam crackers, which split hydrocarbons into smaller molecules at chemical factories, will not be moving north soon, either: they are too big an investment, too integrated in existing supply chains, and already in the process of being electrified.But Mr Wolf’s principle still holds for some industries—and may benefit other northerly locations not directly on the North Sea. In Narvik, farther north on the Norwegian Sea, Aker Horizons, a firm that invests in renewable energy, wants to establish a green industrial hub powered by offshore wind. In Boden, a Swedish town near the eastern coast of the Scandinavian Peninsula, H2 Green Steel is erecting a new steel mill, Europe’s first in half a century. The factory will run not on coal or natural gas but on green hydrogen, created in one of the world’s largest electrolysis plants using onshore wind and hydroelectric power. Besides exporting steel, H2 Green Steel hopes to export its hydrogen and sponge iron, an intermediate product that has already taken in much of the energy needed in the steelmaking process. This would amount to splitting the steel industry in two, explains Henrik Henriksson, the firm’s chief executive. The energy-intensive bits of the process would migrate to where they can be done most efficiently: right next to the sources of renewable energy. The more labour- and knowledge-intensive parts could remain in Europe’s steelmaking heartlands like the Ruhr valley. In Wilhelmshaven, a German city on the North Sea, Uniper, a state-owned energy company, has just completed Germany’s first terminal for imports of liquefied natural gas (LNG), to replace some of the Russian gas no longer flowing through pipelines from Siberia. The firm is planning to erect crackers to produce hydrogen from ammonia next to the LNG terminal. In another corner of the port, close to a decommissioned coal plant, Uniper will build its own hydrogen plant and provide plenty of space for energy-hungry businesses. “Wilhelmshaven will play an important role as the place where green energy comes onshore,” says Holger Kreetz, who is in charge of managing Uniper’s assets.Other companies flocking north include manufacturers of electric-vehicle batteries, which also require lots of energy to make, and producers of wind turbines, which have suffered from recent supply-chain snarls. Vestas, the world’s biggest turbine-maker, is closing a factory in China and will open one in Poland, in part to be close to a new wind farm on the Baltic Sea. As with all such shifts, some see problems. Renewable energy will be even cheaper elsewhere, warns Christer Tryggestad of McKinsey, another consultancy. Rather than investing in and around the North Sea, firms could move to sun-kissed places such as the Middle East or Spain. Not everyone is convinced that the EU can meet its ambitious goals to ramp up the production of offshore windpower. Vestas and its fellow turbine-makers are already complaining bitterly that permits for new wind parks can take a decade or more to secure. The offshore-wind-services firms warn that they may soon run out of people and machinery to keep customers happy.The last obstacle comes from across the Atlantic. President Joe Biden’s Inflation Reduction Act includes $370bn in subsidies and tax credits for climate-friendly products and services, so long as they are made in America. The EU worries that the handouts will lure investors away from its shores. The bloc is looking into whether the law breaches international trade rules.If these problems can be overcome, the new North Sea economy’s impact on the continent will be momentous. As Europe’s economic epicentre moves north, so will its political one, predicts Frank Peter of Agora Energiewende, a German think-tank. This could shift the balance of power within littoral countries. Coastal Bremen, one of Germany’s poorest states, could gain clout at the expense of rich but landlocked Bavaria. At the European level, France and Germany, whose industrial might underpinned the European Coal and Steel Community, the EU’s forebear, may lose some influence to a new bloc led by Denmark, the Netherlands and, outside the EU, Britain and Norway. The French and Bavarians may bristle at the idea of a de facto Windpower and Hydrogen Community centred on the North Sea. But it would give Europe as a whole a much-needed economic and geopolitical boost. ■ More

Whatever the economic weather, the sun always seemed to shine on Silicon Valley. America’s five largest technology companies—Apple, Microsoft, Alphabet, Amazon and Meta—saw their revenues and profits grow at five times the rate of American GDP in the decade to 2021. Tech’s ability to thrive as others struggled seemed to be confirmed during covid-19 lockdowns, when firms in the Valley posted record earnings even as much of the economy crumpled.In 2022 tech’s luck ran out. It has been a difficult year for everyone: the S&P 500, an index of America’s largest firms, has fallen by a fifth since January. But digital firms have been hit harder, with the NASDAQ composite, a tech-heavy index, losing a third of its value. Tech’s five giants have collectively lost a dizzying $3trn in market value (see chart 1). The most dramatic loser, Meta, barely even counts as part of “big” tech any more—nearly two-thirds of its value was wiped out, leaving its market capitalisation at just over $300bn.The end of tech exceptionalism has several causes. One is that after years of growth, digital markets are maturing. Take advertising, the lifeblood of Alphabet and Meta, and a growing sideline for Amazon, Apple and Microsoft. During past downturns, ad spending fell but spending on digital ads kept growing, as advertisers pulled their budgets from old media like TV and newspapers and shifted adverts online. Today, much of that migration has already taken place: about two-thirds of ad spending in America this year was digital. Online ad platforms are thus vulnerable to the cyclical shifts that have long battered their offline rivals. In July Meta reported its first-ever quarterly drop in revenue; in October it reported another.The next change is competition. For years tech was synonymous with concentrated markets: Google monopolising search, Facebook dominating social media, and so on. These days competition is fierce. Part of the reason for Meta’s pain was that new rivals, particularly TikTok, caused the first-ever drop in user numbers at Facebook, its flagship social network. Tech firms are also trespassing more on each other’s turf. Amazon’s cloud-computing arm has seen a sharp slowdown in growth, partly because Google is pouring billions into its own cloud service, taking big losses in order to gain a toehold in the business. Netflix, which for years had streaming virtually to itself, now faces competition not just from Disney and Warner Bros but from Apple and Amazon, which can splurge more liberally on content. That is one reason why its market value has dropped by 50% this year.These changes in the structure of the tech business have coincided with headwinds that are particularly troublesome for digital companies. In America the Federal Reserve has raised the upper bound on its policy interest rate to 4.5%, from 0.25% in January, as it battles inflation. This makes life harder for all businesses. But tech companies, whose high valuations reflect investors’ belief that they will deliver outsized earnings far in future, look much less appealing in a world of high rates, which erode the present value of those promised earnings. Higher rates have been particularly hard on the venture-capital (VC) industry, which places long-term bets on unprofitable startups. The value of new VC deals globally was 42% lower in the first 11 months of 2022 than in the same period the year before, according to Preqin, a research firm—a steeper fall than after the financial crisis of 2007-09.Semiconductors have been another sore spot in the tech world. Over the past two years the supply of chips has built up as manufacturers have added capacity. But just as chip production bloomed, demand withered, thanks to falling sales of PCs and smartphones. Further pain was caused by the collapse of the cryptoverse, which meant miners of digital currencies no longer needed the advanced processors built by Nvidia and AMD, two big chipmakers. On December 21st Micron Technology, an American maker of memory chips, reported a quarterly loss and said it would lay off a tenth of its staff in the new year. Geopolitical tensions added to the strife. America announced several new trade restrictions on the export of semiconductor equipment to China, the world’s biggest buyer of chips. China has also become an operationally riskier place. Before it began being dismantled in recent weeks, its draconian zero-covid policy saw factories placed suddenly under lockdown. Apple, which makes most of its gadgets in China, is steadily shifting new production to India and Vietnam. Supply-chain hiccups have weighed on the world’s most valuable company, which despite outperforming its peers has still lost more than a quarter of its market value in the past 12 months.These difficulties mean that the year ahead will be a lean one in techland. Most have made a resolution to trim their costs, which in many cases means cutting the payroll (see chart 2). Tech firms worldwide have announced more than 150,000 job cuts so far in 2022, according to Layoffs.fyi, a website. Meta alone accounts for 11,000 of those. Amazon has told graduates who were meant to be starting work in May 2022 that they will need to wait until the end of 2023. Whereas tech once seemed like something of a haven for investors and employees, in the months ahead it may feel like anything but. ■ More