Friends (the one with estrangement): Europe without the US

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The Economist.

Hello and welcome to the Intelligence from the Economist. I'm Rosie Blore.

And I'm Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world.

Those of us with office jobs got pretty used to working from home during the pandemic. Many companies now want staff back in the office but have struggled to get them there. So here's an Would remote workers accept lower pay?

And we reflect on the life of Pablo Johnson, a photographer and chronicler of New Orleans who was perhaps more famous for his humble suppers of red beans and rice. First up though, When the news moves this fast, Monday seems like months ago. That's when we talked about the Munich security conference and how American officials, including Vice President J.D. vance, seemed prepared to tug at the foundation stones of the post war order.

Because as President Trump has made abundantly clear, he believes that our European friends must play a bigger role in the future of this continent.

European leaders might have hoped for a quiet week after all that. Nope.

I think I have the power to end this war.

President Donald Trump's power to end the war in Ukraine seems to be offering concessions very, very aligned with Russia's interests and his justifications to Ukraine very, very aligned with Russian propaganda.

You should have never started it. You could have made a deal.

I could have made a deal For Ukraine.

Ukraine should never have started the war. It's outrageous. But still the outrages came. We're back in the realm of policy making by name calling.

But think of it.

A modestly successful comedian, a dictator without elections.

On Monday, we came down on the side of cautious patience, taking a deep breath, trying to get things placed on that hole. Seriously, literally. Axis. But by now, European leaders need to get moving bigly.

I think that this is the bleakest development in European security since the Iron Curtain descended across the continent.

Christopher Lockwood is our Europe editor.

Europe's leaders need really now to start planning for a worst case scenario where America starts to withdraw from Europe. They need start doing that fast to forestall it or to be ready if it does happen.

Well, let's talk through that worst case scenario. What exactly do you mean there?

What I mean by that is something that's nothing less than the unravelling of NATO itself. It appears that Donald Trump doesn't value it. He tends to see it as a shakedown that gives Europeans cheap security provided by the Americans. He seems to want to do a deal with Russia over Ukraine without consulting them. This deal might be completely unacceptable to Ukraine. Then if America feels that Ukraine isn't on board, it might withdraw support for Ukraine, leaving Europe to pick up the pieces. And one big worry for me is that Donald Trump clearly seems to want to rehabilitate Russia. And that flies in the face of a long standing strategy to try and isolate Putin, the aggressor. He seems very happy in the company of Putin in the past, without any clear benefit, I think, to NATO or the west trying to improve diplomatic relations. They've talked about doing business deals with Russia, but Russia is a dangerous aggressor. Aggressor. And if America really wants to help out the Russian economy by investing in it, that to me is an extremely alarming development. And yet it might be the case because we've seen all sorts of strange things. Trump is now constantly parroting lines that come directly from the Kremlin, lines like the war was started by Ukraine or that Vladimir Zelensky, President of Ukraine, is a dictator.

So in some sense, by casting doubt on America's membership of NATO, the damage is already kind of done here. Europe should already be on its guard.

Yes, I think so. The whole principle of NATO and its deterrence rests on the security of knowing that if one country is attacked, then other members will come to its aid. But Donald Trump sheds doubt on that, and doubt is corrosive. It leaves Europe dangerously exposed. People fear and there's lots of evidence that they're considering this, that Donald Trump will start to roll back NATO's presence from its four positions in eastern Europe as part of the bargain that Trump and Vladimir Putin dream of. They talk about a world of spheres of influence, an idea that Putin is very keen on. America feels that it shouldn't be carrying the can for the entire world's security. But the problem with that is that Europe is not really up to the task.

What do you mean though, that Europe isn't up to the task?

Well, Europe could be up to the task. It has a gdp, national output that is equivalent more or less to America's. It's more people, a larger consumer market, it's got advanced manufacturing industries, advanced technology. It's perfectly capable of defending itself and far more powerful than Russia. Its GDP is about 10 times that of Russia's, but it doesn't spend enough on defense. It's not very good at acting with unity and with urgency. It's not coordinated at all in the face of these new threats, and it needs to start doing that soon.

How, though? I mean, point by point, how could Europe gather together what it doesn't have to meet this moment?

Well, it's going to have to start devising new structures to do it, because NATO doesn't work very well without America. And we're now talking about planning for a NATO essentially without America. And the European Union is a big baggy construct consisting of a lot of small countries that put very little money into defense and a few large ones that don't always see eye to eye. It really needs urgently to come together as a grouping of the largest countries, I think, to hash out how they are going to spend a lot more money and fast and start putting ideas on the table.

But if what we're talking about here is a collective defence shift of position, all that's going to require a great deal of, if nothing else, military hardware.

Yes, absolutely. At the moment, Europe is extremely dependent still on America. They need more heavy lift aircraft, overlift helicopters, they need better logistics, they need surveillance, they need the lot. And the reason that they need it is that they have been dependent on America for a long time, typically spending throughout the post 1990s period only a bit more than 1% of GDP on defense. They got a wake up call in 2014 when Russia first took a bite out of Ukraine and they started to spend a bit more, but still not enough. Just recently since the main invasion in 2022, they have started to up their defense spending. But it's nowhere where it needs to be.

So where does it need to be? What kind of numbers are we talking about?

It's difficult to put an exact number on it, but during the Cold War, typical defence expenditures for the big countries were 4 or 5% of GDP, not the approaching 2% that we see now. So you're talking about practically a doubling of defence spend. And of course, it's not just about money. You have to make sure you spend the money well and in a unified way so that you're not duplicating capabilities or coming up with incompatible equipment and so on, but basically is about providing a lot more resources. And that is going to cost money. An extra 2% of GDP equates to more than 300 billion euros a year extra. That will have to be found from debt, from higher taxes and from reallocating budget priorities, which means less money for other things, for social services, for pensions, for welfare payments.

What you're describing is an enormous structural set of changes, fiscal set of changes, for what you describe as a baggy construct. Do you think it'll work?

I think it's going to be extremely difficult. But there are a few encouraging signs. There was an interesting small group that met in Paris on Monday night. This was the leadership of the largest countries in Europe, France, Germany, Italy, Spain, Poland, the Netherlands. Those are the six biggest economies, plus Britain, not in the eu, but very much now associated with this new urgency. And they did start talking seriously about how they might finance much greater defence expenditures. So that's a good start. I think the best way will be to drive it with a smaller group, invite others to follow, pressurize others to follow. But those are the big economies, those have the most money. So that's where the lift is going to have to come from.

In a sense, what you're describing is somewhat aligned with what Mr. Trump said Europe should have done before now, anyway. It is matching, if not appeasing, his notions.

Yes, I think that's right. Now, I don't want to use the word appeasing here because in many ways I think Donald Trump is right. You know, Europe is a big, rich continent and it should be be taking a greater share of its own security. It should be the prime body that confronts Russia. America has no border with Russia, Europe does. So appeasing is not quite the word. But if Europe shows that it is serious about burden sharing, I think that does increase the chances that America will want to stay in the game, won't pull vital troops out of Europe, won't start to limit defense cooperation. But you can't predict anything with Donald Trump. Unfortunately, he does change policy at whim. However, this is a theme that has run through for a very long time, his interventions that he says, you know, Europe does need to do more. So I think a first step would be for Europe to signal very clearly indeed that it is prepared to do more and is starting to do more. And to do that, it has to hit some very ambitious targets, getting part of the way to 4 or 5% within the next few years, perhaps a target of 3% by the end of the decade or even more than that. They will have to come up with something pretty big and impressive and quite soon.

Chris, thanks very much for joining us.

Thank you.

The pandemic proved not just that working from home was possible, but that many of us preferred it. Recently, though, big companies have been telling staff they have to go back to the office. Dell, Amazon, even the US Government have been issuing decrees, come back to your desks or face the consequences. But what if there was another way?

So where we are right now is employers are mandating these return to office requirements for workers because companies really want their employees back in the office. At the same time, workers really don't like going to the office. Workers want to be remote. Workers want to have flexibility.

Alex Domash writes for the Economist.

What hasn't really emerged yet is this idea of a tax. Basically give workers the option that if you want to continue working from home, you can do so, but you're going to get paid a little bit less than you're currently getting paid.

So spell that out for me, Alex. What do you really mean by taxing working from home?

So jobs often come with certain benefits or certain drawbacks. And perhaps it makes the most sense first to think about a job that comes with a drawback. Think about a job that requires a night shift or a job that is dangerous. These jobs typically pay workers more in order to compensate them. Well, work from home is sort of the opposite side of that coin. Work from home is a perk. It's a benefit. And because of that, really, workers should get paid slightly less with their base salary for a job that incorporates this benefit.

So where's the idea of a work from home tax come from?

So if workers really, really value working from home and working remotely, the natural question is, how much do they value it? And economists have been trying to answer this question for the past few years. Back in 2021, 2022, there are a number of studies that showed that workers typically valued working from home about at the equivalent of 8% of their salary. It's significant, but it's not huge. A more recent study that came out a few weeks ago from academics at Harvard Business school, at Brown University, and at UCLA actually found that workers might value working from home at the equivalent of a 25% pay cut from their current wages. And what these academics did to find this evidence is they looked at workers in the tech industry, and they actually directly observed the jobs that these tech workers were being offered and the jobs that they ended up up taking. Now, some of the job offers included the option to work remotely or to have a hybrid work schedule, and some of the job offers did not. Some of them required that workers work full time in the office. And what they found was that tech workers basically valued equivalently a job that paid 25% less and allowed flexibility to work remotely as a job that paid 25% more and required that workers be full time in the office.

So workers might accept lower pay. Are companies actually offering lower pay for the same jobs?

So far, we're not seeing a lot of evidence. What we are seeing instead is companies doing these return to office mandates Rather than thinking of adjusting the salaries. And maybe there are a couple of reasons that can explain this. First off, from a human resource perspective, companies typically don't work, like to pay workers who are doing the same work different wages. They're concerned that this will create internal inequities that might cause resentment among some workers. Then there might also be some legal issues. Because women tend to work remotely more often than men, There are some legal concerns that implementing a work from home tax will unfairly penalize women, and that can worsen the gender pay gap. However, what we've also been seeing at this point is we've been seeing a labor market that has really been tilted in favor of workers over the past many years. And what this means is that work from home tends to be a incentive or bargaining chip in order to get the top talent to come to your company.

Right. So what happens when labor market conditions worsen?

If labor market conditions worsen and more workers become available and are looking for jobs, then firms might not need to compete for workers the same way that they used to, by offering them flexibility and remote work options. Instead, what we might see is that firms begin to price in this perk because the companies have the sort of leverage in the bargaining power because there are more workers available. They might say, you can work remotely, but it's going to be at a slightly lower wage than if you were to come in and work in the office full time.

But it sounds like for the moment, we're really stuck with these return to office mandates rather than incentives.

Yeah, and return to office mandates are really something that workers really, really don't like. In fact, when JP Morgan recently announced their return to office mandate, they had a comment board where workers could basically respond and, you know, voice their views on the return to office mandate. And after a couple of days, JP Morgan had to shut down the comment board because it became so overwhelming with workers who were very, very upset. Return to office mandate. Similarly, in 2023, Dell offered its workers basically the option to continue to work remotely full time, but if they were to do so, they would no longer be eligible for promotions. They thought that this would be enough of an incentive to get workers to return to the office. However, around 50% of the workers who were given this option chose to continue to work remotely, even if it meant sacrificing their eligibility for promotions. And so we have found ourselves in this very strange equilibrium where it's sort of a tug of war between the workers and the employers to try to settle on what is the best outcome in terms of remote work. And we might see a new equilibrium emerge, an equilibrium where employers say, gee, well, if you want to continue to work remotely, then we're going to pay you less to do so. And this might be an outcome that workers dislike even more than the current return to office mandates.

Alex, thank you for coming into the office to talk to me.

Thank you very much. It's been a pleasure.

Tomorrow on the Weekend Intelligence, our subscriber only Deep dive show a dispatch from the healthcare department of the gray market Internet. Plenty of hucksters will promise you that human growth hormone can improve everything from your sleep to your sex drive to your bmi. Misleading claims would be bad enough, but my colleague finds that the hormone is doing serious harms to many hopeful buyers.

There are rules at Pablo Johnson's Monday dinners.

John Fasman is our senior culture correspondent and is standing in for Ann Row this week.

No phones. Pay attention to the people around you. Don't sit next to someone you know. Bring something to drink if you must. But Mr. Johnson provided the food and the menu never changed. You got red beans and rice, traditionally a Monday dish in New Orleans because the ham bones from Sunday dinner could lazily simmer away in a pot of red kidney beans while the city's cooks and matrons did laundry for the week. On the side was cornbread with butter or, on lucky occasions, sorghum syrup and bourbon. For dessert. The formica topped oval table came from his grandmother, and he was quick to point out that it was not the formal dining room table. It was from the kitchen, where Mr. Johnson and the 23 other grandchildren crowded around for meals, as did his mother and her generation. Tables have soles after a fashion, they retained the traces of all those who have gathered, and Mr. Johnson believed that his needed to be fed at least twice a week. And so on Mondays between 8 and 12 people showed up. And though there were regulars, he never fed the same group of people twice. Guests included friends, friends of friends and friends of theirs, musicians and lawyers, journalists and chefs, doctors and teachers, young and old, a mix of races, backgrounds and social classes, all gathered around bowls of rice topped with Mr. Johnson's perfectly cooked beans. It was the best bowl of red beans and rice I've ever had, and I've had plenty. First timers felt instantly welcome. Mr. Johnson was warm, disarming and impish, with twinkling brown eyes and a ready smile. He often called himself a Cajun grandma with a beard. And the meal, he said, was just supper, an unfussy serve yourself sort of dinner with spoons and a roll of paper towels at the center of the table, designed to put people at ease and get them talking to each other. But in New Orleans, supper is never just a meal. Nowhere do Louisiana's French roots show as deeply as in the centrality of food to its social life. Recipes tend to feed crowds because families were large and good food draws crowds. Bars often prepare rice and beans on Mondays to attract patrons on an otherwise slow evening. Sometimes it takes an outsider to fully appreciate a place's ethos. Mr. Johnson was not native to the city. He arrived in 2001. He was born in New Jersey and moved as a child to New Iberia, which is deep in Cajun country around 200 km west of New Orleans. He then attended university in San Antonio, Texas, where he changed his first name from Paul to Pablo, ending in an eaux. The name symbolized the connection he felt to San Antonio's Latinos, and the spelling honored his Cajun heritage. But though he didn't arrive until he was an adult, it was impossible to imagine him anywhere else. He cooked gumbo for crowds while living in Texas and eventually wrote four books, all of which were about food and or New Orleans. The same qualities that made him a peerless host served him well in his career as a photographer. He specialized in black masking Indians. These are societies of African American New Orleans who parade in these beautiful, colorful, intricate, handmade Costumes to honor the Native American tribes that in the 19th century sheltered runaway slaves. He was a familiar figure around the city, flitting at the edge of a scene, dressed always in black, with camera slung over his shoulders. Parades are all about movement, but if you look at his pictures, at the heart of them is a pensive stillness and dignity that reveals the person behind the costume. His portrait work has a similar intimacy. He often took pictures from just inches away, the better to capture the joy, wariness or playfulness in his subject's eyes as they reacted to him. It's a reminder that photographers often say they make pictures rather than take them. Masking Indians in second line clubs can be suspicious of outsiders with cameras who show up to take pictures of the colorful proceedings that they then publish and sell without sharing the money with people in the photographs. And Mr. Johnson, in fact, struggled for years with the question of how to ethically commercialize his work. But when someone he'd photographed died, Mr. Johnson invariably showed up at the funeral bearing an immense framed image of the deceased as a gift for the family. And when he sold a picture, the subject got half the proceeds. Pablo collapsed after going into cardiac arrest while photographing a second line. And after he died, some paraded in a celebration of his life. That's a rare honor for an outsider. And in the days that followed his death, people around the world who had been fortunate enough to be his guests in New Orleans made red beans and rice themselves and invited friends and strangers alike to partake. They may even have raised a glass or two with one of Mr. Johnson's favorite phrases that came like the table from his grandmother. Ain't we lucky.

John Fasman on Pablo Johnson, who's died aged 59.

I'm going floating down the Mississippi river.

On my way to New Orleans.

There's no wonder.

That's all for this episode of the Intelligence. The show's editors are Chris Impey and Jack Gill. Our deputy editor is John Jo Devlin, and our sound designer is Will Rowe, with help this week from Timo Silot. Our senior producers are Rory Galloway and Sarah Larnyuk. And our senior creative producer is William Warren. Our producers are Maggie Khedifa, Benji Gai and Jonathan Dead. And our assistant producer is Henrietta McFarlane, with extra production help this week from Emily Elias. We'll all see you back here tomorrow for the weekend. Intelligence.