Keep Kamala and carry on: Harris’s smooth route

The Economist.

Hello and welcome to The Intelligence from The Economist. I'm Rosie Bloor.

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

Over the past decade, China has defied the sceptics in producing innovative and highly successful private firms. The number of these so-called unicorns is dwindling. Is politics or economics to blame?

And one of the more colorful features often found on the British seaside are rows of narrow little huts, open only during the rare outbreaks of good beach weather. We ask why the prices for these pokey places have gone through the roof. At an event at the Democratic Party's headquarters in Delaware yesterday, America's vice president launched her campaign to become its president.

Do we believe in freedom? Do we believe in opportunity?

Do we believe in the The promise of America. And are we willing to fight for it? And when we fight, we win. God bless you all.

Kamala Harris has swiftly mounted the proverbial stump after Joe Biden stepped aside, his hand forced by weeks of stumbling public performances and Democratic hand-wringing. And questions about Ms. Harris's chances in a race for the party's nomination have disappeared as quickly as have her potential rivals for it.

Since the weekend, things have moved incredibly fast.

Daniel Franklin is a senior editor at The Economist.

The Democratic Party has rallied around Kamala Harris, who is now the presumptive nominee for the party. She claims to have got the backing of enough delegates to be swiftly elected as the party's nominee, and she's raised enormous amounts of money money and injected a new energy into a campaign that was really struggling.

And what has Ms. Harris herself had to say?

Well, so far, not all that much. She's been extremely lavish and gracious in her praise for Joe Biden, which I think she has rightly had to do.

We love Joe and Jill. We really do. They truly are like family to us. And we do—

everybody here does.

It's mutual.

That allows her then to serve as a launchpad on the basis of the backing that he has given her.

I want people to remember that what we have done has been incredible, and we get so much more we're gonna get done. And I wanna say to the team, embrace her, she's the best.

And then she's really started to turn, but just started to turn her attention to attacking Donald Trump. And you can already see some of the lines of the prosecutor that she was. Starting to come out. This is really going to be the prosecutor against the convicted felon.

I took on perpetrators of all kinds. Predators who abused women. Fraudsters who ripped off consumers. Cheaters who broke the rules for their own gain. So hear me when I say, I know Donald Trump's type.

And as for the record fundraising, how has that come together so quickly?

I think there was a huge amount of money waiting to flow towards a more credible candidate behind whom Democrats could really rally other than Joe Biden. Funders had been holding back from President Biden as his problems were becoming ever clearer. So this has really removed the dam and the money has duly flooded into Kamala Harris's campaign. And it reflects, of course, a newfound energy and enthusiasm for the Democrats' campaign and chances generally. I mean, it was impressive that Donald Trump raised $53 million after his conviction on numerous counts in New York, but Kamala Harris has way exceeded that since becoming the candidate. $81 million in a very short space of time. And I think that just shows that money is not going to be a problem for her campaign. In fact, it's probably going to be an advantage.

And do you think the sort of rapid coalescing of support, this flood of money, this sort of energy that you mention, are a sign that Ms. Harris can challenge Donald Trump more effectively than Mr. Biden could have. Have the, the odds in the overall election changed here, do you think?

Well, it's too soon to see that in reliable polling, but I think that the fact was that things were looking so grim for the Biden campaign, and I think one of the reasons why he did eventually step down was the numbers were showing that there was really diminishing chances of him managing to defeat Donald Trump. With a new candidate, younger candidate, already the energy is palpable. It becomes a genuine contest. There's still a lot of ground to catch If you look at the polling that there is, she polls behind Donald Trump, but she has the opportunity, a big opportunity, to, I think, reintroduce herself to American voters and to make this a very competitive race.

I mean, we're talking as if this is absolutely signed, sealed, delivered here. There is still an actual nomination to be made. Is it entirely zipped up?

I think there's precious little doubt at the moment. I mean, there were people who argued strongly and quite persuasively that there should be a genuine competition here, that Corinna coronation, if you like, of a new candidate was not the best solution. Genuinely try to see who the better candidate might be and let that be part of the exciting process leading up to the convention and give a sense of the alternative choices that the Democrats now have. But that is not going to happen. It's very quickly become apparent that the really big figures in the Democratic Party have mostly rallied quickly behind Kamala Harris, and not least Nancy Pelosi, who's really been pulling the strings behind the scenes in order to persuade President Biden to drop out of the race. One after another, the potential challengers, the likely mostly Democratic governors who might have been the candidates to oppose Kamala Harris, has said that they support her as the nominee and are not going to run themselves. So I think it's pretty much clear now that she is the presumptive nominee and there's no real mechanism going to be available to challenge that. So the party has decided to put speed and unity above a genuine competitive process.

But I suppose that does give the Trump campaign someone to focus on, uh, new angles of attack.

Yes, it has two problems really. The, the— there's the one is exactly the one that you mentioned, that the Trump campaign can, and in fact is already saying, that a party that claims to be defending democracy is itself showing that it doesn't really believe in democracy because it's just ignored the wishes of all the millions of voters who, who voted for Joe Biden as their candidate. The second issue is that maybe they haven't ended up with the best possible candidate to take on Donald Trump. A genuinely competitive process might have yielded a candidate with perhaps more qualities, fewer flaws than Kamala Harris. But that's— I think it's too late for that. She is going to be the nominee.

So what will the lines of attack then be for the Trump campaign against Ms. Harris?

They'll attack her as someone they think is dangerously liberal, they will claim. They'll attack her record back in California, the high crime. Trump, as you know, is always adept at attaching labels, branding his opponents, and he's taken to calling Kamala Harris laughing Kamala Harris. You ever watch her laugh? She's crazy. You know, you can tell a lot by a laugh. No, she's crazy. She's nuts. She's not as crazy as Nancy Pelosi. Crazy Nancy. So drawing attention to her tendency to laugh quite a lot, not something you would necessarily think was a particular fault, but there you go. And I think one of her biggest vulnerabilities is going to be her record as vice president on the border, which is a huge issue in the campaign, one of the main points for Republicans. And that was something that she had been given specific responsibility for, the diplomacy around America's southern border. And of course, the record numbers of illegal migrants crossing that border is going to be something that you'll hear Republicans go on about again and again. So I suppose in a matter of days, everything has really moved so fast. You have a new race, new lines of attack from the Republican Party, and a brand new energy behind the Democrats. The race is on.

Daniel, thanks very much for your time. Thank you, Jason. For loads more insight into how this election came about and how voters had ended up with a choice between two old white dudes, let me draw your attention to our latest subscriber-only series. Boom, or boom. It traces the history behind the enormous power that the baby boomer generation has accumulated and is still wielding over the rest of us. The first 3 episodes of boom are already out, and non-subscribers can listen to the first one for free, and they should.

The last time the intelligence was on unicorn watch, back in February, we reported from the venture capital-rich slopes of Silicon Valley and found that the number of unicorns there was dwindling. But what about their Chinese cousins? Well, they seem to be suffering an even worse fate. The number of new billion-dollar Chinese startups—yes, I'm afraid we are talking about that kind of unicorn—is falling fast.

China used to be home to many unicorns. In fact, up until around 2020, it used to create as many new unicorns unicorns each year as America.

Corbin Duncan writes about finance and economics for The Economist.

Though so far this year, it's only created half as many as the US, and that says a lot more about how the government has handled its startup industry than it does about a global slowdown in unicorns.

Corbin, just remind me what a unicorn is.

So a unicorn is a privately held company which is worth more than $1 billion.

Okay, so tell us what's been going on. What's been wrong until now about how China has handled these startups?

So for many years, Chinese unicorns grew really quickly, but the party always approached this with some level of suspicion. They thought that all of these fancy new internet apps, which would ensure that you were able to hail a cab or get your meals a few minutes earlier, were not contributing to the real economy. And then tech giants began moving into the businesses which the state normally had control over. So we're talking about sectors like finance. In 2020, 2021, China's President Xi Jinping labelled this sort of behaviour a disorderly expansion of capital. It was the sort of growth that the Chinese Communist Party did not want to encourage.

When they were growing fast, was that just because the economy was growing fast, or was there something else that was going right?

China's economy was growing very fast. These were the go-go years where still there was a lot of foreign capital which was pouring in, and that foreign capital was really important to funding startups. Foreign capital was more risk tolerant. It was willing to lock up its money for longer periods of time. And that was really important to growing these startups. As China's economy grew very fast, the average Chinese person became richer and had more money to spend on consumer products. And so that meant that there was a real market there that startup founders were looking to serve.

So is it now the case that unicorns aren't being created or they're being created elsewhere?

It's a bit of both. So there are fewer unicorns being created today, and those that are on track to reach unicorn status tend to actually leave to politically safer places like Singapore or America.

I thought it was quite hard to take your money out of China.

That's true, but changing your headquarters for your company is apparently not so difficult.

I see. So is there any way that the Chinese government can now tempt these entrepreneurs or their businesses back?

The Chinese Communist Party has started paying a lot of attention to how it can try to improve the environment for new startups, and it's trying to introduce more of its own cash to replace the lost foreign capital. It's trying to tinker around the edges to improve the risk tolerance of its investors. But there are some inherent tensions with how the Communist Party approaches the private sector and the sort of certainty that startup founders need to be able to build their businesses.

And do you think that anxiety is about the business environment or the personal environment for those founders or the heads of those companies?

I think a lot of it has to do with the business environment. So it's very difficult if you're a startup founder to find the sort of capital that you need for the long term. And if that capital comes from the state, it often has strings attached. And that means that you have government officials which want to see a certain amount of jobs created. They want capital invested in certain localities or certain types of technology. So it's very difficult to build a commercial business in China focusing on profits with state money.

And is there likely to be a further influx of foreign money for these startups?

That's not likely to happen anytime soon. Higher interest rates in the US mean that a lot of US capital has returned home, but also it's going to take a long time for foreign investors to trust that the business environment in China is safe for their money for the long term. Over the last decade, foreign investors backed 2 in every 3 startups in China. Today, that's more likely to be 1 in 5.

So what sorts of areas are the successful unicorns now emerging in?

So those few unicorns that make it today in Xi Jinping's China tend to be engaged in innovation in hard tech sectors like semiconductors, green technology, and space.

So not just hard tech, but hard tech that the government approves of then. That's exactly right. So when we've seen Chinese officials at the Third Plenum, the recent meeting all about economic reform and how to stimulate growth in the Chinese economy, talking about proactive stimulus, Your bet, it sounds like, is not on unicorns in a variety of sectors.

The entrepreneurs and investors that I spoke to sounded pretty pessimistic. They think that the government has correctly identified the problems, but it's really not within its gift to fix them because of these inherent tensions in how it approaches the private sector. And it doesn't really look like the Third Plenum has been able to resolve those contradictions. What we know from looking at greener pastures elsewhere is that entrepreneurs and unicorns really thrive when they have reliable access to capital, stable business confidence, and the freedom to experiment. And they're not going to find that in China.

Corbyn, thank you so much for talking to me. Thank you, Rosie.

Britain's seaside towns contribute more than their fair share of the country's iconography. There's fairground piers and fish and chips and Punch and Judy puppet shows.

Sam Colbert writes about Britain for The Economist.

But high on that list are beach huts. Beach huts are these these small wooden sheds, really, that are lined up on beaches up and down the British coast. They get used as storage spaces for beach chairs, as little changing rooms. A lot of them have kitchenettes where you can have a gas stove to make a pot of tea, or you can just sit in them and enjoy the sea view. Typically they cost tens of thousands of pounds, but in places they cost hundreds of thousands. In Margate, the cost to rent one of these huts for the summer is about £1,400. I was there on a recent Saturday, and I was surprised to see that of the 150 or so huts that I could see on Westbrook Bay, only a few were actually in use. The rest were padlocked up. The waiting list to rent one of these beach huts for the season is currently at an estimated 7 years. And right now it is closed to new applicants. So why spend so much money for a shack on the sand that you don't get much use out of? Well, one of the reasons they're so expensive is that supply is restricted. Local councils limit the construction of new beach huts because they don't want to spoil the view for everyone else. And these huts come onto the market fairly rarely. They get handed down from generation to generation within families, and then families use these huts as a meeting place every summer.

They're these sort of colorful sentinels on the border between land and sea, and it's the ultimate small room with a view once you're sat inside.

Catherine Ferry is a historian who's written books on the seaside and on beach huts.

Daily lives can be quite fractured, I think. The neighborliness of the past is not necessarily something that everybody has anymore. But there were lots of families who had had these beach huts for a long time, maybe since childhood, and they'd been handed down. And so they knew everybody there. And so I definitely met people on my travels who had had their beach hut longer than they'd had any house they'd ever lived in.

I spoke to some beach hut owners, though, who, when describing their huts, like to use words like quintessential and iconic, because they describe these huts as integral to the fabric of British history. And in fact, it was in Margate that these huts, or at least the precursor to these huts, was said to be invented. Before the beach hut, there was something called the bathing machine. And the bathing machine was this big wooden box on wagon wheels that had a staircase coming out from the front door. This was in use in the Victorian era. And back then, a horse would draw your bathing machine out to sea. A swimmer would enter from the back and get changed, or strip down to nothing, as was the case with men at that time. You would step out into the water under a pull-down canvas hood, and you would get to bathe in privacy. And this was perfect for the prudish Victorian era. That was also when a few dunks in cold seawater was thought to be medicinal. Eventually, the wheels came off the bathing machines, and they plopped down on the beach and became beach huts. They became especially popular starting around the 1930s. And this is when, for the first time, British mill workers were getting paid time off, and the mills would shut down for the summer for repairs, and they would all head to the beach and use their huts. And for a while, this birthed a booming seaside holiday industry. But then in the 1970s, air travel to Europe became much cheaper, and in places like Spain you have much more reliable sunshine. And so these seaside towns fell into decline, and, and still today some of these towns are the poorest places in the country. But especially since the turn of the century, beach huts have gone the other way. They've become more and more expensive, getting up into these hundreds of thousands of pounds figures in some places. And those prices jumped up again during the COVID-19 pandemic. More people were going on staycations. More families were leaving big cities, moving into seaside towns where they'd have their house and their hut. In the last couple of years, the prices have started to level out. In England, tighter rules are coming in to limit the ownership of second properties. Demand is dipping, but I don't think anyone expects that the market will fade completely. And maybe that's because, if nothing else, the beach hut offers this priceless moment that I think the British beachgoer is uniquely positioned to savor, which is when you're on the beach and you can watch someone scramble to their car when the skies open up as you sit and sip your tea dry and safe inside your tiny wooden refuge.

That's all for this episode of The Intelligence. We'll see you back here tomorrow.