Greenlighted: American climate legislation

Hey, Ryan Reynolds here for Mint Mobile. You know, one of the perks about having four kids that you know about is actually getting a direct line to the big man up north. And this year he wants you to know the best gift that you can give someone is the gift of Mint Mobile's unlimited wireless for $15 a month. Now you don't even need to wrap it. Give it a try@mintmobile.com Switch upfront payment.

Of $45 for a three month plan.

Equivalent to $15 per month. Required new customer offer for first three months only. Speed slow after 35 gigabytes if network's busy, taxes and fees extra.

See mintmobile.com.

Hello and welcome to the Intelligence from the Economist. In London, I'm Jason Palmer.

And back in New York, I'm John Fassman. Every weekday we provide a fresh perspective on the events shaping your world.

For all the venture capital sloshing around, even in the developing world, not a lot of it ended up in Africa. Investors just perceived too much risk, too much instability. That is changing and fast as billions roll in.

And for elite sportsmen, every facet of life is optimized, analyzed, planned and perfected. But for elite sportswomen, there's one thing that until now hasn't been taken into account. The performance effects of the menstrual cycle.

First up though.

The Senate being equally divided, the Vice President votes in the.

Affirmative and the bill, as amended, is passed.

On Sunday, after debating through the night, America's Senate passed an immense climate focused bill. And we did it without a single vote to spare.

Our bill reduces inflation, lowers costs, creates.

Millions of manufacturing jobs, enhances our energy.

Security, and is the boldest climate package in US History.

Just two weeks ago, such ambitious legislation seemed out of reach. But then Joe Manchin, West Virginia senior senator, reversed course and said he'd support it. Soon after, he and Chuck Schumer, the Senate Majority leader, announced an unlikely deal that included a slate of health care and tax priorities. Democratic leaders then had to figure out if kyrsten Sinema, like Mr. Manchin, a senator on the right flank of their caucus, would also support it. For a few nail biting days, Senator Sinema didn't say very much, but after a few twists to the legislation, she too got on board. Now America stands on the verge of passing the most significant climate investment in the country's history.

Yesterday, the Senate passed the Inflation Reduction act, which is probably the biggest legislative achievement for President Joe Biden so far.

Idris Kalhun is our Washington bureau chief.

Although it's less than President Biden had come into office promising. It still represents one of the largest investments in mitigating climate change that America has ever passed, spending hundreds of billions of dollars in clean energy credits.

Now, we've discussed Biden's legislative agenda before, and this bill looks quite different from what was originally called the Build Back Better plan. What's changed?

So the Inflation Reduction act is a much slimmer version of Build Back Better. Although it has kept a lot of the climate change spending, it has stripped out a lot of the social safety net spending that was originally proposed as part of Build Back Better, including things like universal pre K and child care subsidies and these sorts of things the Democrats had been excited about. But it's still a fairly significant achievement. And if it looks modest, that's only in comparison to the President's huge ambitions that he had when he came into office. So in addition to those hundreds of billions that it's going to spend on mitigating climate change, it also importantly extends subsidies to people who got health insurance through the Affordable Care act, which were set to expire. But it also allows Medicare, which is the government's health insurance program for the elderly, to negotiate the prices of some expensive drugs that it pays and have previously been barred from doing that. And I think probably most notably for voters, it also establishes a $2,000 out of pocket cap on the amount that Medicare recipients would have to pay for the drugs in a given year. The cost of drugs for elderly people is obviously an incredibly closely watched issue. So that'll be a very significant development. Democrats, when they first came into office, thought that they would repeal most or all of Donald Trump's tax cuts. But because of Senator Sinema's objections to a lot of those, there was only a portion of that. The main portion Here is a 15% minimum tax on large corporations. It's expected to raise hundreds of billions of dollars over the next decade.

So let's talk about the headline item. Those hundreds of billions of dollars going to fight climate change. What does the bill do there?

So the bill is expected to be very significant. President Biden had set a goal of getting the country's carbon emissions to 50% below their 2005 levels by the year 2030. With this bill in effect, the modeling suggests that it will cut US carbon emissions by 40% relative to 2005 levels by 2030. So it gets the country most of the way there. And the way that it does it is largely through tax incentives for clean energy products, solar, wind. It also includes some tax credits for consumers who would be able to buy electric vehicles or heat pumps or more efficient products. It doesn't include any of the restrictions that Democrats had originally wanted. That's partially because it's hard to pass those kinds of things through reconciliation, but also because Senator Joe Manchin was wouldn't have gone for it. And indeed, part of this deal is that there's separate legislation that Democrats have agreed to move forward which would ease permitting rules for pipelines and fossil fuels. So in the short term, we'll see an increase in legislative endorsement of fossil fuel production. But the idea is that the investments that are made here will yield much lower carbon emissions many years down the future.

And the bill is labeled the Inflation Reduction Act. Do you think that the bill is likely to arrest inflationary pressures in the.

U.S. so this bill does a lot of things and a lot of good things for Democrats specifically. But the Inflation Reduction act is not expected to reduce inflation all that much. And that's not just me saying that the Congressional Budget Office, which is a nonpartisan scorekeeper for legislation and independent modelers like the Penn Wharton Budget Model estimate that this will have a very marginal effect on overall inflation. But it's really excellent marketing. So certainly for Democrats, it's not going to increase inflation like the American rescue plan did. A lot of it is going to go towards paying down the deficit, but it's not really going to do a whole lot to address the high inflation. That's probably a job that the Federal Reserve will be doing all the heavy lifting on.

So it doesn't do much to address inflation. And it's a significant haircut from the initial build back, better plan. How are Democrats feeling? Do they see this as a success or a compromise?

They are all elated and they see this as a success because you have to remember that a few weeks ago they all thought, I certainly thought that the result was going to be zero. After all of their effort over the last year, they can take solace in the fact that this is probably the most significant piece of climate legislation since the Clean Air act was passed. Chuck Schumer certainly seemed happy when he spoke after the passage of the bill.

It's been a long, tough and winding road.

At last we've arrived and we are elated. Every member of my caucus is elated about what happened because we've really, we've.

Changed the world in a way that.

You rarely get an opportunity to do that.

It's not nearly as big as they'd hoped for. But also circumstances were different. Inflation then was not nearly as big. Of a problem. The President was incredibly popular, and he had just gotten through a fairly large stimulus package. And I do also think that Build Back Better never really resonated with the American people. It never really had a clear idea. It was a wish list of everything that the Democrats wanted to do. The Inflation Reduction act, even if it doesn't do what it says is something that Americans will understand and is made up of a lot of components. Increasing taxes on corporations, decreasing pharmaceutical costs, increasing subsidies for climate mitigation, which the American people are all fans of. So in that way, the slimming effect might have been quite helpful.

How hard was it to get it passed? Take us through this past weekend.

So, normally to get legislation passed in the Senate, you have to surmount the threat of a filibuster, which requires 60 votes. And given that the Senate is 50 Democrats and 50 Republicans, that often kills a lot of legislation. The way you can get around it is by using a process known as reconciliation, which means that as long as the bill is primarily budgetary, you only need a simple majority, in this case, 50 senators, given that the vice President breaks the tie in order to advance your agenda. Now, reconciliation is not a simple process. It has a few special rules. All provisions of the bill need to be primarily budgetary in nature, otherwise they can be taken out. And also as a result of that, you have this spectacle, which is called a votorama, which basically means that after the Senate has agreed to proceed with debating the bill, an unlimited number of amendments can be offered to the legislation. That gives everyone a chance to put their messaging out. It gives Republicans a chance to jam the works and to make their Democratic colleagues take unpopular votes. It allows progressives like Bernie Sanders, who was a bit annoyed that the bill didn't go as far as he wanted to introduce some of his own ideas, which all got voted down pretty resoundingly. And occasionally there are actual modifications to the bill, which we saw only a few of this time around. But senators stayed up all night on Saturday going through this voterama process, and then on Sunday, they finally finished, and then they passed the bill, which is now going to go to the House. Probably by the end of the week. It's expected to pass there also along party lines, at which point President Biden will very gleefully sign it into law.

And so you've been talking a lot about the midterms on checks and balance. You've been on the road a lot. You probably will be on the road a lot more in the coming months. How do you think this deal will affect the upcoming midterms?

Well, I think it will certainly be a positive for Democrats. A lot of Democrats have worried that they would be hammered in the midterms to come because the president's approval rating is low, inflation is high, and they don't have much of an answer for the question of what are you doing about it. This gives them something to point to. Of course, all of those things will probably remain. So it won't be a sea change for Democrats, but at least gives them some lifeline in districts where they might otherwise have done really poorly. It's still quite an uphill battle, but this does give them some amount of hope.

Thanks so much for your time today.

Great. Thank you for having me.

Until not so long ago, venture capitalists would have shied away from Africa, a region that was perceived as presenting risks well beyond the usual startup worries. Boy, how things have changed.

Africa is today a growth market in every sense of the word.

Richard Okello co founded Sango Capital, a South Africa based investment firm, in 2011 and since then he's seen just how much attitudes have shifted on and towards the continent.

It doesn't matter what the sector is, pipes or real estate or financial payments or they're growing quite quickly. There's a growth dynamic that is real. And that growth dynamic goes from companies that are $100 million in revenue all the way down to companies that are, you know, have less than a year since they started.

Mr. Okello is part of a growing class of investors overseeing a flood of capital.

Last year was a bumper year for venture capital in Africa and, and for African startups, there was record fundraising. The industry raked in more than $5 billion, which was more than the seven preceding years combined. And five of Africa's seven unicorns, which are startups valued at more than a billion dollars, won their horns last year.

John McDermott is our chief Africa correspondent.

It was really a sign of how attitudes are changing towards the continent and it's come at just the right time because it's a continent that lacks capital and really needs more disruptive businesses.

And so where are these big money investments coming from?

A lot of them are coming from American funds. Big names like Andreessen Horowitz, Tiger Global and Rivet Capital have been investing in emerging markets for many years. And what you saw last year was eventually some of that tide lapping up on African shores. But it wasn't just American based funds. The other thing you're seeing is a rise in African based funds like that of Mr. Okello's. They invested in a quarter of deals last year, compared with just 10% in the preceding seven years. And that just shows you how slowly but surely on the continent, rich Africans are changing where they put their money. Not completely, but now you're seeing more dabble in tech, as well as in the more traditional areas, such as infrastructure, commodities, and real estate.

So a lot of this is focused.

Around tech then, naturally, because it's venture capital money, but it's subtly different to some of the investments you're seeing in the rest of the world. A good way of explaining that is to look at a company called Jumia. Jumia a few years ago was dubbed the Amazon of Africa, and it became the first African unicorn, probably for that reason. What happened is everyone got very excited, they put a lot of money in the the founders and early investors got very rich, but it's since lost a lot of value after going public. And what people told me when writing the piece was that it didn't quite understand that the African consumer is just different to that in much of the rest of the world. And now more money is pouring into businesses that don't necessarily pretend that African consumers are like American ones, but that are trying to fix the myriad market failures that are present on the continent, especially into startups that make it easier for businesses to work with each other, whether that is in logistics, in healthcare, or most of all in fintech, which has seen more investment than any other sector. And a lot of the unicorns that you've seen, such as OPE Wave, they're in fintech. And while some of the demand for fintech is being driven by African consumers who prefer using an app to using a traditional bank, I'll say a lot of it is also being driven by businesses that find it irksome and tiresome to send money around the continent or even within the same country.

And how does that compare with what's happening with venture capital elsewhere in the world?

Africa is the only region that is continuing to see growth in investment funding, whereas the rest of the world is either stagnating or falling. I think it's worth just pointing out that the numbers, though, are still relatively small. $5 billion in venture capital going into Africa last year is a drop in the ocean. $600 billion was raised worldwide. So one of the reasons, perhaps, why Africa has continued its momentum is simply because we're talking about really small numbers, and the industry is still very young and has a lot of challenges still to wrestle with.

And what are some of those challenges?

Well, most importantly, it hasn't been going long enough to see lots of successful exits so that future investors can say, well, these guys made some money, so I'm going to go in as well. And until it does that, fund managers are conscious that it remains a work in progress. So that's the biggest challenge. But there are other ones as well. Fund managers will often talk about the foreign exchange risk. If you're investing in Nigeria, for example, you really want to make sure that the businesses you're investing in have some commerce being done in US dollars. The naira, the Nigerian currency in 2015 was relatively strong. You could get 200 naira to the dollar. And the last time I checked with my friends in the streets of Lagos, it was more than 700. So if you're investing in Nigerian startups, you want to make sure you can get your money out and that that business has some way of hedging against that risk. There's also a concern amongst startup founders and also startup investors that there's a particular type of investor, usually male, into fintech, that the money tends to chase and that there's a whole pool of founders ignored, in particular women. Then there's a shortage of skills. Not so much software developers, but the type of people who can take a good idea and a promising startup into profitability for many years. Often the most aspirational career if you're an African graduate, is to work for a big multinational company. So there's a lot of experience there. But according to the people I spoke to for the piece, there's less in terms of growing a startup. And one final challenge is that because the industry is so young and because a lot of the founders are really young as well, there is a concern amongst later stage investors that by the time they get to the party, a lot of the equity has been given away. So that calls for some of that corporate savvy, but also some better legal advice as well.

And what about the role of states here who clearly want to get their portion of the money that's potentially on the table?

You're starting to see African governments design policy to help startups and to help venture capitalists. Nigeria recently had a startup bill, for example. But there are quite a few structural things that need fixed. One is to make it easier for pension funds to invest in startups. The second is to make it easier for cross border payments, which can make it hard to grow a business in Ghana if you're a Nigerian firm, for example. And because a lot of these companies are needing Pan African markets, or at least regional markets to succeed. That issue of cross border payments is so important, but it's not just a question for African governments. I would say that there's a lot rich countries can do as well. They'll often host these Grand Summits with 50 African leaders and invite sexy startup founders. But away from the hype, not really getting a lot of the basics right. Consider visas, which are becoming an absolute nightmare for startup founders as they are for lots of skilled people on the continent. I spoke to one CEO who is from Benin, but he just so happens he also has a French passport and that French passport has allowed him to go to Paris, go to London, go to San Francisco to get investment. And he said to me point blank I would not have been able to expand my firm had it not been for that. I would have just been sat in consulates all my time trying to get out the country. So if there's one thing that they could do, just make it easier for people to travel. That all being said, I think this is ultimately a positive story at a time when there's not a lot of positive stories coming out of the continent. And for too long, investors in Africa have either wanted to solve social problems rather than just build businesses or they've been told that we're not going to give you money because Africa is too risky. And what these data show is that slowly but surely Africa is becoming a normal place to do business just like the rest of the world. And that's a great thing.

John, thanks very much for joining us.

Thank you, Jason.

For England fans, watching the women's national football team clinch the title of European champions at the end of last month was a clear sign that the women's game is starting, at least to get the attention it deserves. The team's success, of course, didn't come down to just that one game. Behind that win were years of development, the inputs of coaches and experts, anything to squeeze out another fraction of a percent of performance. And in that kind of no stone unturned pursuit of sporting glory, some female athletes have been trying a new tack.

There's an increasing research in how the menstrual cycle is affecting sport and athletes are trying to leverage that research to improve their performance. So you see top athletes hiring strength coaches, nutritionists, sports psychologists, and now they're hiring coaches that are informed on how the menstrual cycle is affecting sport.

Abby Bertix writes about science and technology for the Economist.

And those coaches are working with these lead athletes to help determine how their period is affecting them on the field, in the pool, on the track.

So what kinds of effects does the menstrual cycle have on female athletes?

Good data concerning the effects of the menstrual cycle are hard to come by. It hasn't been researched heavily until recently and the studies haven't had a lot of people. The quality hasn't been great. But there was a meta analysis done in 2020 that has shown that more than half of female athletes believe their performance to fluctuate with the phase of their menstrual cycle. So in particular they said that in the weeks leading up to menstruation and the week of menstruation, there are negative side effects. World class performers like Fu Yuanhe, who is a Chinese swimmer, have spoken openly about this as well. In the rio Olympics in 2016, she finished fourth in the women's 4x100 meter medley relay and was asked if she was in pain. She told the interviewer in Mandarin, actually my period started last night, so I'm feeling pretty weak and really tired as of yet. There's no concrete scientific evidence that the menstrual cycle will affect your performance in a one off situation. But the evidence is stronger that hormones and the menstrual cycle can affect ligaments in your body. An example of this is with ACL injuries. Women are much more prone to ACL injuries than men and some studies suggest that this level of risk is related to the menstrual cycle.

So what's the actual mechanism here? How does the cycle affect performance or susceptibility to injury?

The menstrual cycle is really, really complex. So there are multiple hormones going on. They're going up, they're going down. The two main hormones here are estrogen and progesterone. Estrogen is anabolic, meaning it helps to build up muscle and progesterone is catabolic, breaking it down. So at the beginning of the cycle, your body tends to prefer to metabolize carbs. And then towards the end, during the luteal phase, when both hormones are high, the body is less resilient to stress and there's higher inflammation. At this point, women have increased appetites, higher internal temperatures, higher resting heart rates, higher respiratory drive. You retain water and salt, causing you to put on weight and mood and emotional regulation suffer. So there's huge body wide systemic changes due to hormones. And here also is fertile ground for where athletes could adapt their training and make a few percentage point improvements.

But how though? How can that knowledge change training?

One possible tactic is phase based training where a coach adjusts the intensity the Volume, the type of an exercise depending on where an athlete is in her cycle. I spoke with Stacy Sims at Auckland University of Technology in New Zealand, who is a particular proponent of this phase based training. And they're all looking for that little bit of extra. Then this is where you can look.

And say, okay, we look at your menstrual cycle, we look at how these hormones are affecting you and your recovery.

And we dial it in according to stress and stress resilience. So she recommends that at the beginning of the cycle, when both hormones are low and the body is less stressed, you should increase intensity because the body is primed to bear these heavy loads. Training gains can be made later during the luteal phase when both hormones are high. You might want to focus on more steady state, more technique, less intensity.

But clearly some athletes think that there's gains to be made.

Absolutely. Athletes do not want to wait for clinically proven scientific evidence. They're always hacking their bodies, trying to figure out how to get better. It's what works for them as an individual rather than what will work for the majority of women across a population. I spoke with Maddie Cope, who, who is a professional climber and a coach in Britain. Climbing is a really technical sport and it's also a sport where athletes are super in tune with their bodies because it's body weight. You can notice if you're feeling slower, if you're feeling heavier. And in that way, a little menstruation driven thinking may help you to get your best performance.

Where I would love to see this.

Go is that all strength coaches and.

People who are really working with athletes see it as valuable and an integral part of their learning process to learn.

About the menstrual cycle and be able to integrate it into someone's training plan. Maddie says that what's really needed is to bridge the gap between where research currently stands and how athletes actually feel.

And you say this kind of thinking is becoming much more widespread. Why do you suppose that is? It's not as if women's sports are themselves new.

Women's sports aren't new, but for sociological reasons, they have been very much underappreciated. And I think now they are starting to really come into focus. And research into women's sport is also becoming more popular. Tony Hackney started in the field in 1979 and he's a professor of exercise physiology and nutrition at the University of North Carolina. He has seen a growing interest in studying these types of questions.

I think the number one reason why.

It has become now an issue of much more interest is because we have.

Finally started to see more and more.

Women enter into the science field and.

Be in positions of leadership and direct the focus and research.

Historically, women have been ignored in science. So this exercise science research is going to hopefully unlock new potential for women because rather than ignoring the existence of the menstrual cycle, we can leverage it to improve performance and improve the lives of women.

Abby, thanks very much for joining us.

Thank you, Jason.

That's all for this episode of the Intelligence. Let us know what you think of the show. You can get in touch@podcastseconomist.com and you.

Can subscribe to the economist@economist.com intelligenceoffer the link is in the show Notes. We'll see you back here tomorrow.