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This article is an on-site version of Free Lunch newsletter. Premium subscribers can sign up here to get the newsletter delivered every Thursday and Sunday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersHello readers. For all the talk of artificial intelligence, the most efficient computer on Earth remains the human brain.It can perform the same number of operations per second as the world’s supercomputers, but only requires power equivalent to a fridge lightbulb.For this week’s newsletter, I’m switching from the usual counter-consensus macroeconomic analysis to an exploration of an unorthodox idea: the economics of the human mind. There is an emerging strand of research that emphasises the importance of “brain capital” — a function of brain health, capacity and skills.It might sound woolly, but it matters for two reasons. First, since the industrial revolution machines have been increasingly replacing human brawn and routine cognitive tasks. By 2030, the share of activities expected to be delivered predominantly by people will fall from about 50 per cent today to 33 per cent, according to the World Economic Forum’s latest Future of Jobs Report. That puts humanity’s comparative advantage in narrower areas of thinking.Second, we now live longer. State-defined retirement ages are less relevant in knowledge-driven economies. An individual’s cognitive skills are longer-term assets than physical strength. But “brain capital” is under pressure. Illnesses that affect brain function — including mental health conditions, substance abuse and neurological disorders — are estimated to cost the global economy $5tn per year (roughly the size of the German economy in nominal terms today). That’s expected to rise to $16tn by 2030.According to the World Health Organization, depression is the leading cause of disability worldwide. Its prevalence has risen 89 per cent since 1990. Alzheimer’s disease and other dementias have increased by 161 per cent, largely due to ageing populations.Problems are spread across the age distribution. There’s a bulge in healthy years lost to poor mental wellbeing among the traditional “working age” bracket. But even in retirement, other neurological disorders spike.Some content could not load. Check your internet connection or browser settings.Brain capacity is also being squeezed. “Our mental lives are more fragmented and scattered than ever before,” said Dan Nixon, an expert on the “attention economy” — which models attention as a scarce resource in high demand. “Apps, alerts and notifications are locked in a constant battle to capture and monetise our gaze.”It is estimated the digital universe doubles in size every two years, with 2.5 quintillion bytes of data created every day. Much of that is now at our fingertips.Daily screen time across devices — such as computers, laptops, tablets, mobile phones, televisions and game consoles — increased from 9 hours in 2012 to 11 hours in 2019, with time spent on mobile phones increasing by roughly two hours, according to a global study. (It received a bump after the pandemic too.)Some content could not load. Check your internet connection or browser settings.The rising demands on our attention are limited by our ability to supply it. This is highlighted by Thales Teixeira, a former professor at the Harvard Business School. His research has shown how the cost of attention has risen, using the price of gaining 1,000 impressions on TV adverts during the Super Bowl and US prime time as a proxy. Over time, both have surged, particularly with the growth of internet usage, as competition for consumer attention has expanded to other media.Of course, rising screen time also means spending more time accessing enriching news, research and entertainment. But trying to absorb too much content has negative side-effects.“Constant exposure to information and notifications can overwhelm our cognitive capacities,” said Mithu Storoni, author of Hyperefficient, a book about optimising our brains. “Flitting between stimuli reduces our attention span, and the overload can contribute to mental fatigue, impaired memory and increased stress.” Indeed, there is a relationship between overload and brain health. High social media usage has been associated with higher levels of depression, particularly in younger cohorts. High screen time can also worsen symptoms of ADHD, and has been linked to a higher risk of dementia.Some content could not load. Check your internet connection or browser settings.Digital technology also has an impact on the third element of “brain capital” — skills.Aside from technological and AI-linked skills, employers surveyed by the WEF said creativity, resilience and analytical thinking were among the top competencies likely to grow in importance over the next five years.These are also skills strained by pressures on brain capacity. Digital distractions can thwart creative thinking, and the stress and anxiety from information overload can sap resilience. (Nixon mentioned the “mindless grasping impulse” — reaching for your phone, for no particular reason — triggered by the dopamine hit we experience when accessing digital content.)What about analytical thinking? Big data, machine learning and wider access to content has supported our research capabilities. Still, even basic skills appear to have atrophied over the past decade.The OECD’s Survey of Adult Skills shows that more developed economies have experienced declines in literacy proficiency than improvements over the past decade (even after controlling for demographic changes, such as immigration). As for numeracy, the picture is more mixed — but still worrying.Some content could not load. Check your internet connection or browser settings.David Robson, a science writer and author of The Intelligence Trap, has some theories: Various studies suggest that, after having risen for most of the 20th century, the average performance on intelligence tests has started to stabilise or even drop in many countries. This may reflect changes in the ways that we use our brains. For instance, we now use our smartphones for most calculations, so we don’t exercise some numerical skills as regularly. Vocabulary is also weakening, perhaps because of changes in people’s reading habits. Robson added that skills not captured in IQ tests, such as rationality and critical thinking, tend to be more strongly correlated with overall wellbeing. But these competencies are also under pressure.Several studies highlight how news feed algorithms and clickbait can enhance bias by creating “online echo chambers” and disinformation. Both have also been linked to rising political polarisation. In America, voters’ sentiment about the economy reliably flips based on their alignment with the president. The Gallup Economic Confidence index highlights this, but also shows a general rise in polarity over time. Greater exposure to news affirming one’s position online is a possible explanation.Some content could not load. Check your internet connection or browser settings.Then there’s the “Google effect”, where we treat the search engine as a form of random-access memory and remember fewer easily searchable facts as a result.All of these blunt our critical thinking, in part by exacerbating our innate cognitive biases. This isn’t new; even pre-internet these effects existed. But the scale and intensity now is inordinately greater. In this environment, it is easier to consciously or subconsciously outsource decisions elsewhere, and this has implications that warrant deeper consideration. (Researchers at the University of Cambridge recently warned that conversational AI agents could develop the ability to influence our “intentions” too.)What’s the upshot? Wider access to information, global improvements in education and better nutrition have all boosted brain capital. But trends in brain health, rising demands on our attention and forces undermining our critical thinking are concerning. The human mind is a resource that needs strengthening to support long-term wellbeing, growth and innovation, particularly as technology plays a greater role in our lives and economies. As the world focuses on piling trillions into artificial intelligence, it’s wise not to lose sight of the returns that come from investing in real intelligence.Thoughts? Rebuttals? Message me at freelunch@ft.com or on X @tejparikh90.Food for thoughtDid the second world war help build the foundations for US biomedicine innovation? A new National Bureau of Economic Research working paper reckons so, highlighting the long-run effects that coordinated and application-oriented research can have on science and technology.Recommended newsletters for youTrade Secrets — A must-read on the changing face of international trade and globalisation. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.UK economic data next week is expected to show a mix of mounting inflationary pressures and ebbing confidence that could make uncomfortable reading for the Bank of England.Wednesday’s inflation data is expected to show a 2.8 per cent annual rise in consumer prices in January, up from 2.5 per cent the previous month, reflecting the introduction of value added tax on private school fees and a rebound in airfares.While the rise in inflation would be in line with the BoE’s own forecasts — which see annual price rises accelerating to 3.7 per cent by mid-2025 — it could nevertheless be awkward for a central bank that cut interest rates this month, with two members of its Monetary Policy Committee voting for an extra-large half percentage point cut.Higher inflation “would at the margin complicate [the BoE’s] message, which is to look through this current inflation ‘hump’ as . . . temporary”, said Sandra Horsfield, an economist at Investec.Separate data on Tuesday is expected to show that the annual growth rate in wages climbed to 5.9 per cent in the three months to December. That would be above the 5.6 per cent in the three months to November and would continue the upward trend from the 4.9 per cent rate in the three months to September.Horsfield also forecasts a deterioration in business and consumer confidence when February data is published on Friday, in part reflecting uncertainty over US President Donald Trump’s trade policies.However, she expects a rebound in retail sales in January after a disappointing end to last year. Valentina RomeiIs the run of strong US economic data set to continue?A survey of business activity in the US services sector is expected to show accelerating growth, extending a streak of strong economic data that has led investors to scale back their bets on interest rate cuts.The February reading for S&P’s services purchasing managers’ index, due on Friday, is forecast to come in at 53.5, according to FactSet estimates — up from 52.9 a month earlier. Any reading above 50 signals expansion, while a figure below that threshold indicates contraction.Evidence of stronger activity in the services industry would continue a run of buoyant economic data, including a resilient January payrolls report and a stronger-than-expected inflation reading. Those recent updates sparked a sell-off in US government bonds and stocks, as traders pushed back their predictions for the Federal Reserve’s first rate cut this year.However, next week’s US manufacturing PMI is forecast to come in at 50.7 — still in expansion territory, but down slightly from a previous reading of 51.2.“The bottom line is clear: the Fed should not be cutting. No matter which way the Fed chooses to slice and dice the data — headline, core and supercore — they all came in higher than expectations,” said Daniel Siluk, a portfolio manager at Janus Henderson, following Wednesday’s consumer price index reading.“While early year CPI reads are notorious for seasonality and distortions, the labour market is clearly stable and economic conditions don’t warrant easier conditions. All signs suggest that the neutral interest rate should be higher.” Harriet ClarfeltHow strong is Eurozone business activity?Eurozone business activity data due on Friday could offer investors further clues about the pace of interest rate cuts ahead of next month’s European Central Bank meeting.The February reading of the IHS Markit composite purchasing managers’ index — which combines manufacturing and services activity — will give an early insight into how European economies have been reacting to Trump’s plans to impose sweeping tariffs on the bloc. The US president has said he would put “reciprocal” tariffs on the country’s trading partners, both allies and adversaries on a “country-by-country” basis.Many of the bloc’s largest economies, including Germany and France, are already battling an economic slowdown. A consensus of analysts expects a PMI reading of 50.5, just above the 50 mark that separates growth from contraction. That would mark a slight improvement on January’s reading of 50.2, which surprised on the upside.The figure could be an important input for ECB policymakers. This month the bank cut rates by an expected 0.25 percentage points, as it treads a fine line between inflation — which in January came in above expectations — and weak growth.With recent data showing a weakening labour market and with disinflation “on track”, according to ECB president Christine Lagarde, the central bank is widely expected to cut rates by 0.25 percentage points from the current 2.75 per cent.The PMI report also provides a snapshot of companies’ hiring expectations, which would give further hints for the ECB about the state of the labour market, according to Tomas Dvorak, an economist at Oxford Economics.“If firms do start larger-scale lay-offs, this could force the ECB into faster rate cuts . . . it already seems behind the curve,” he said. Mari Novik More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Japan is betting $1.5bn on a breakthrough in next-generation ultra-thin, light and bendy solar panels, subsidising the commercialisation of a technology that analysts say could disrupt China’s dominance of renewable energy and reduce Tokyo’s dependence on fossil fuels.Perovskite cells are 20 times thinner than regular solar panels and could be plastered over stadiums, airports and office buildings, enabling mass adoption of solar in a mountainous country that lacks the open space needed for more conventional solar farms. Officials in Tokyo have set an ambitious goal of installing enough cells to generate energy equivalent to 20 nuclear power plants by 2040, positioning the technology as essential for Japan to achieve its target for up to 50 per cent of its electricity to come from renewables.With this in mind, the government is providing subsidies worth up to ¥157bn ($1bn) to Sekisui Chemical, the company at the forefront of efforts to develop perovskite solar film. That comes on top of ¥60bn of support for the technology’s earlier development, and more could be handed out through funds aiming to build green supply chains.“Perovskite solar cells are a vital trump card to pursue simultaneously decarbonisation, economic growth and energy security,” said Sadanori Ito, the government official behind the plan. “We view it as an indispensable technology for the further spread of renewables in Japan.”China produces 85 per cent of the world’s solar cells and 79 per cent of polysilicon, the material that goes into them. By contrast, perovskite cells’ main ingredient is iodine, for which Chile and Japan are the world’s top suppliers. This could help reduce risks to critical supply chains and energy infrastructure from overreliance on a single country, analysts said. Given the cells will be at least three times more expensive to make than current technology in the early years of production and uncertainty about how much mass output will lower costs, initial demand is more likely to come from denser cities such as Tokyo, Taipei and Singapore.Yana Hryshko, head of solar supply chain research at Wood Mackenzie, a consultancy, said Japan’s plans were “feasible”, noting that “it’s not secure in terms of energy security to buy from China”.“But the only place capable of scaling up a particular technology and bringing down the cost is China,” she added.Even so, Japan’s focus “is not only the right way, it’s the only way they have” to try to regain competitiveness and control of their supply chains, said Hryshko.Perovskite solar cells are layers built out of chemical components, including a power-generating crystal structure, that are together only a millimetre thick and can absorb large amounts of light.Because China has land for solar farms, its manufacturers focus on heavier forms of perovskite cells encased in glass or used in tandem with silicon solar panels, rather than the ultra-thin film type that Japan is focusing on.“We feel a very strong threat from China’s speed and scale,” said Yusuke Sakurai, business development manager for Toshiba’s perovskite cells. “But because China is developing glass-type perovskite cells . . . I see it as a different market.”Sekisui Chemical has set up a new company, with 1,000 employees after deploying its devices at its Osaka headquarters, bus stops outside Osaka station and Tokyo cruise terminal. Sekisui controls an 86 per cent stake in the new company, while the remaining 14 per cent is held by the government-owned Development Bank of Japan.The plastics producer has solved the biggest technical bottleneck of avoiding moisture from seeping in by developing a special sealing resin. It plans to invest ¥310bn ($2bn) to produce 1 gigawatt of the cells by 2030 at a former Sharp factory, half of which will be covered by state subsidies. At this scale, it expects costs will be on par with traditional silicon solar cells.More immediately, it is aiming to achieve stable production of film at 1 metre width, up from 30cm currently. It will start producing 100MW per year by 2027 to bring the cost to three or four times that of regular solar panels, according to Futoshi Kamiwaki, president of Sekisui Solar Film, the new company. The other outstanding challenge is developing the materials to affix the panels on different types of walls, roofs and urban surfaces.“If we can clear these two challenges, then we will be able to firmly enter into mass production,” said Kamiwaki, who is also eyeing export of the cells to the US and Europe. “In the domain of solar energy, this is the last chance to tackle China’s market dominance.”Climate CapitalWhere climate change meets business, markets and politics. Explore the FT’s coverage here.Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here More

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Donald Trump’s administration has slashed US international aid commitments, removing a big source of assistance in sectors from economic development to health. The planned shrinking of the US Agency for International Development (USAID) is the headline move in a wave of overlapping actions that global institutions and recipient countries are scrambling to address. Washington has announced its exit from the World Health Organization, while the fate of its big contributions to other global development and health institutions across the world is in the balance.How do US contributions compare to other aid providers? US foreign assistance obligations amounted to $68bn across 204 countries and territories for 2023, according to official figures. Almost two-thirds of the total was managed by USAID, with most of the rest overseen by the state department. Much of it is spent by agencies themselves, US contractors and local partners, rather than given to foreign governments. The biggest share of total spending — just under a third — was devoted to economic development, roughly a fifth to humanitarian aid, while peace and security and health each received around $10bn.Some content could not load. Check your internet connection or browser settings.The US is the biggest international donor by some distance. The $63.5bn it gave in 2023 compared with $34.7bn from EU institutions, according to OECD data. Germany was the next largest nation state donor with $32.2bn, ahead of Japan on $19.3bn and the UK on $17.3bn.Other big international institutions make significant contributions, mainly in the fields of economic development and health. The World Bank weighed in with $16.3bn and the charitable Gates Foundation with $4.9bn. While the volume of US funding is large, it is not a particularly generous donor in per capita terms. Norway led the way among countries with assistance worth 1.09 per cent of its gross national income in 2023, followed by Sweden with 0.91 per cent and Germany with 0.79 per cent. The US was at 0.24 per cent — well under half the proportion given by Turkey. Some content could not load. Check your internet connection or browser settings.What cuts has the US made? US aid is relatively diversified, reflecting the fact that its uses vary from military assistance to poverty relief. In 2023, more than a quarter of its aid obligations were to Europe and Eurasia and a little less than a quarter to sub-Saharan Africa. The biggest international aid recipients as a share of national income are in Africa. The proportion rises to almost a quarter in Central African Republic and a third in Somalia, according to the OECD figures. The biggest change since Trump returned to the White House has been the gutting of USAID’s activities. On February 3, Elon Musk, head of Trump’s so-called Department of Government Efficiency declared: “We spent the weekend feeding USAID into the wood chipper”. Last week a judge temporarily blocked the Trump administration from placing 2,200 USAID employees on leave, reducing the agency’s staff to just a few hundred.Some content could not load. Check your internet connection or browser settings.The moves in Washington are already having knock-on effects in the aid world. One example is the Pepfar initiative, which has invested more than $110bn in the international effort to combat HIV/Aids since President George W Bush launched it in 2003. It is often cited as one of the big public health success stories of this century. While the US has issued a humanitarian waiver allowing treatment to continue for most Pepfar recipients, health workers on the ground describe significant disruption. This is because drug purchase is just a small part of the logistics required to deliver such a programme across so many communities. What other effects might the cuts have? Ukraine has been the largest single recipient of USAID funding in each of the years since Russia launched its full invasion in 2022. US strategic allies such as Jordan also receive USAID financing. Global health has been perhaps the most immediately and acutely affected area, highlighting the effects that cuts to one organisation can have on the work of others. The changes have already slowed disease eradication and containment efforts across Africa, according to people familiar with the situation on the ground. Amanda McClelland, senior vice president of Prevent Epidemics at Resolve to Save Lives, a global health organisation, said the Centers for Disease Control and Prevention normally provided “a lot of the technical support, a lot of the staffing and a lot of the key pieces that keep the engine moving, in particular disease tracking”. Gaps were emerging “as things don’t work as they normally would, and as staff pull out”.Current outbreaks across the continent include Ebola, Marburg fever, bird flu and mpox. “These are all high impact outbreaks . . . and it doesn’t take much for them to get out of control and end up costing billions of dollars and thousands of lives,” McClelland said. “The disease tracking systems are dark, and the US is less safe by not knowing what is going on out on the ground.” Ashish Jha, dean of the Brown University School of Public Health and a former US coronavirus response co-ordinator, warned: “We’re just substantially increasing the likelihood that we are going to start seeing outbreaks of haemorrhagic viral fevers like Ebola spread beyond the original country into Europe, into the US.”“I think that risk has just gone up very, very dramatically,” he added.What is the case for curbing international aid?There is a long-standing debate over the desirability and effectiveness of aid flows. Critics charge that they can build unhealthy patterns in which poorer countries develop dependencies on and obligations to richer ones.Some content could not load. Check your internet connection or browser settings.Aid organisations themselves have evolved in response. Some now lay more emphasis on how their work can boost economic development and trade. Others have explicit exit mechanisms for when countries become wealthier: 19 nations no longer receive support from Gavi, the international vaccine alliance, because they have hit certain national income milestones. Opponents of the Trump administration’s approach say it goes far beyond a reasoned aid-sceptical case to wind-down of existing commitments. Rather than managed it has been sudden, disruptive to people’s lives — and is likely to have consequences that have not been fully anticipated. Can others fill the gap?A big question is how the US will engage with leading development organisations, particularly in health. US withdrawal would leave a large hole in some global institutions at an already difficult time. It would amplify difficulties caused by potential shortfalls from other donors. Many are more reluctant to provide finance when struggling with other demands, from conflict to climate change.Two big tests are looming. Gavi is partway to its goal of a minimum of $9bn for its next five-year funding cycle starting next year. The Global Fund to Fight AIDS, Tuberculosis and Malaria is due to launch its three-year replenishment round this year; last time, the US committed to providing up to one-third of total donor contributions.China has been touted as a possible candidate to fill the gap in multilateral aid, but it is not clear this fits with its policy goals. Beijing has historically invested heavily in bilateral relationships that are often infrastructure focused, with a significant loan element. Announcements are continuing to flow from Washington, leaving financial recipients and other donors struggling to gauge their impact. The one certainty is that the international aid world is facing its biggest disruption for decades. More

Beijing is tightening its grip on cutting-edge Chinese technology, aiming to keep critical knowhow within its borders as trade tensions with the US and Europe escalate.Chinese authorities in recent months have made it more difficult for some engineers and equipment to leave the country, proposed new export controls to retain key battery technologies, and moved to restrict technologies for processing critical minerals, according to multiple industry figures and ministry notices. The country’s safeguarding of leading technologies comes amid added tariffs from US President Donald Trump and a trade row with Europe over cars, which threaten to spur more local and foreign groups to move production elsewhere.Among the companies to be hit is Apple’s main manufacturing partner Foxconn, which has been leading the Silicon Valley group’s supply chain diversification into India. People familiar with the matter said Chinese officials had made it difficult for the Taiwanese-owned contract manufacturer to send machinery and technical Chinese managers to India, where Apple is keen to build up its supply chain. A manager at another Taiwanese electronics company said that they, too, were facing challenges sending some equipment out of China to plants in India, though he noted shipments to south-east Asia remained normal. An Indian official alleged China was using customs delays to impede the flow of components and equipment heading south. “Electronic industry supply players have been told not to establish manufacturing and assembly operations in India,” the official said, asking not to be named. Media site Rest of World earlier reported on some of Foxconn’s issues. A Foxconn assembly line India. Apple is keen to build up its supply chain in the country More