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- [00:00]
Commercial Narrator
Why get aaa? Because bad roads, bad tires and bad luck. Out of gas, locked out or in a ditch. Stuff happens with 24. 7 roadside assistance AAA's got your back no matter whose car you're in. Join today@aaa.com AAA expect something more. Roadside assistance is provided by independent facilities contracted by aaa. Coverage in taxis, limousines and other ride sharing conveyances is excluded. 2024 AAA US markets rack National Surveys offers terms Conditions and policies are subject to change without notice. Visit AAA.com for details. Have you been waiting for the perfect time to upgrade your tech? Good news. The wait is over. Dell Tech Day's annual sales event is here and we're celebrating our best customers with fantastic deals on the latest PCs like the Dell 14 plus with Intel Core Ultra processors. We've also got incredible perks like Dell Rewards, fast free shipping, Premium support, Price Match guarantee and more. And while you're upgrading your PC, you may as well go all out because we're also offering huge deals on our premium suite of monitors accessories. You know what that means? That's right. You can get a whole new setup with amazing savings. Clearly this is a sale you don't want to miss. Visit Dell.com deals that's Dell.com deals.
- [01:21]
Jason Palmer
The Economist. Hello and welcome to the Intelligence from the Economist. I'm Jason Palmer.
- [01:33]
Rosie Blore
And I'm Rosie Blore. Every weekday we provide a fresh perspective on the events shaping your world.
- [01:43]
Jason Palmer
Each year, hundreds of millions of Chinese workers return to their hometowns for Lunar New Year. This year, the government issued an unusual warning telling people not to stay at home for long. We asked what's changed that has the government so spooked?
- [01:59]
Rosie Blore
And what should you watch this weekend? I thought our culture editor was very refined until she recommended this extremely steamy TV show. Stay tuned for what you should view and what you shouldn't. And I've been asked to warn you, it gets a bit explicit. But first, Sprawling conglomerates had rather fallen out of fashion in America. Then along came Elon Musk.
- [02:36]
Simon Rabinovitch
One of the things we'll be doing with SpaceX within a few years is.
- [02:40]
Commercial Narrator
Launching solar powered AI satellites at Davos last month.
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Rosie Blore
His ambitions, as ever, were clearly of a planetary scale.
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Commercial Narrator
Space is really the source of immense power.
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Alexandra Seorch Bass
And then you don't need to take.
- [02:53]
Jason Palmer
Up any room on Earth.
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Commercial Narrator
There's so much room in space.
- [02:58]
Rosie Blore
Solar powered AI satellites might sound ludicrous, but this week that vision became more of a possibility. Musk announced that SpaceX would merge with Xai, one of his other companies, which currently makes chatbots that deal is worth $1.25 trillion. Big numbers, big ideas. Question is, will it work?
- [03:23]
Henry Tricks
The rationale of the deal is that both companies will work together to launch a fleet of data centers into space. And that would help boost SpaceX rocket and satellite business and it would also help XAI to generate cheap AI.
- [03:45]
Rosie Blore
Henry Tricks is our US technology editor.
- [03:48]
Henry Tricks
More immediately though, the deal is no doubt meant to generate excitement about a forthcoming SpaceX IPO, which is going to be one of the biggest public listings of all time.
- [04:02]
Rosie Blore
Who knew, Henry, that we would have so many X rated companies being mentioned on the intelligence all the time? We've talked about SpaceX quite a bit less. So about Xai. What is it? What does it do?
- [04:17]
Henry Tricks
XAI is a company that creates AI chatbots. It's a rival to the likes of OpenAI. Its chatbot Grok is a rival to OpenAI's ChatGPT. We've probably heard less about it because it is a sort of middle ranking chatbot. It's not as successful as the likes of ChatGPT. And it's also weighed down somewhat by the baggage that came from merging with X, what we used to know as Twitter last year. So X and XAI are now part of the same company.
- [05:00]
Rosie Blore
So what does it mean in practical terms to merge SpaceX and XAI?
- [05:06]
Henry Tricks
The merger is aimed at using SpaceX rockets to launch satellites into space that would carry within them AI chips that would then be used to create clusters of data centers in space that would then process artificial intelligence using the kind of cheap energy that you can get from the fact that in orbit there is near constant solar power. It sounds like science fiction, but it is kind of plausible. The trouble is that Elon Musk says that his timeline for doing this is two to three years, which like most of Elon's timelines, is in the realm of fantasy.
- [05:56]
Rosie Blore
So if the idea is plausible, why can't it be done this quickly?
- [06:01]
Henry Tricks
So there are two types of challenges. There's an economic and an engineering challenge. The economic quandary here is basically between the cost of energy on Earth and the cost of launch to space. And for now, it's still much cheaper to generate electricity on Earth than it is to send up tons of satellites into space. There's also technical issues. Space based data centers need lots of heavy equipment to cool them. Cooling is a problem up in orbit. It's also unclear whether the sensitive hardware that you need to generate AI, how well these can survive cosmic rays. There are tests that are being done over the next year or two to try and get more Clari. As for the economics, Elon Musk is very confident that Starship, which is his mega rocket, will be able to deliver tons of chip bearing satellites into space. However, Starship is behind schedule and it is not clear when it's going to be able to become the workhorse of the space economy that Elon is hoping it to be.
- [07:20]
Rosie Blore
So what's your take? Is there any way in which this merger makes sense from a money making perspective?
- [07:27]
Henry Tricks
It makes sense. First of all, from the perspective of genning up interest in the ipo, the idea that you can have robots, space colonies, all infused by AI and all under the control of Elon Musk, really excites retail investors in the short term. The problem is that you are hitching together a pioneering and profitable space company with a money losing AI laggard. XAI is burning through cash at the rate of about a billion dollars a month. It's got billions of dollars of debt acquired from when Musk bought Twitter a few years ago to create X. And to add to the burdens, X is under investigation in both the EU and Britain over potential data regulation breaches, including the fact that GROK has an image generator which is widely used to produce deep fakes, including reportedly of children. Elon Musk has denied that the company has done anything wrong, but if XAI is found guilty, then it burdens SpaceX with the potential for really big fines and not to mention the reputational damage to a firm that relies on government contracts for a lot of its business. And there's an additional worry here, and that is that this is personal. Elon Musk has an intense rivalry with Sam Altman who is the the boss of OpenAI, Xai's big rival. Elon and Sam basically established OpenAI together and then parted ways and it's become very acrimonious. And the sense is that Elon is doing whatever he can to try and beat Altman and OpenAI in the race towards the latest and the best AI models. But that is somewhat sullying the more profitable and a really exciting part of his empire, which is space.
- [09:50]
Rosie Blore
Henry, we've already seen Tesla take a bit of a hit from Elon Musk's political reputation. How much is that a risk when it comes to this kind of merger and this company?
- [10:02]
Henry Tricks
It's important in the sense that SpaceX is hugely dependent upon government contracts and if the political winds go against Musk, then it will be harder for the company to get those kind of contracts. Space, military and other contracts that it requires. But one of the reasons why SpaceX is going public is probably to try and insulate it from the musk risk.
- [10:34]
Rosie Blore
Henry, thank you so much for talking to me.
- [10:37]
Henry Tricks
Brilliant talking to you Rosie.
- [10:53]
Commercial Narrator
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- [11:31]
Simon Rabinovitch
If he were here, he wouldn't just.
- [11:33]
Commercial Narrator
Tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a.
- [11:38]
Simon Rabinovitch
Week to assist with your banking needs.
- [11:40]
Commercial Narrator
Yep, even on weekends it's pretty much all he talks about in a good way.
- [11:45]
Simon Rabinovitch
What's in your wallet? Terms apply.
- [11:48]
Commercial Narrator
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- [12:01]
Jason Palmer
The single biggest movement of humanity happens every year in China as workers near the coasts spread out across the country, returning home for Lunar New Year. Ahead of this year's onslaught of planes, trains and automobiles, the Rural Affairs Ministry issued an unusual warning that the government must make sure not too many of those workers stick around at home after the holiday that hasn't traditionally been a concern to find out whether it ought to be one now. Our Beijing bureau chief, Simon Rabinovitch, did some traveling.
- [12:33]
Simon Rabinovitch
So given the government's warnings, I thought it would be interesting to visit a couple of places that in recent decades have been big sources for outbound migration. So I went to Zhoukou in Henan province and Tianmen in Hubei, and I went to areas in those cities where migrants tend to gather the train stations when they're coming back from the cities, the shops, some of the job centers. And you could see it was a month ahead of the Lunar New Year. There were some signs of people coming back early. I met a 60 year old man by the name of Mr. Zhao. He was standing in front of a railway station. He had just arrived back from the city of Nanjing. He'd been working there for 10 months, basically laying tiles, working on construction sites, and he looked like migrant workers have looked for years in China with a big overstuffed suitcase, a white bucket for carrying tools. And he said that he really was feeling the sharp end of the economic downturn in China. There were no more jobs for him. His monthly income was basically half of what it had been a few years ago. And so he was back early in Joko. There was no real alternative. He did say after the holidays he was planning to go back to Nanjing, but he had to wait until there was at least some assurance that the economy was improving. I would say that he was a relatively isolated example. There were a few others like him. But there certainly wasn't a flood of workers streaming back either to Tiananmen or to Zhoukou. So it was not at all like the scenes that, for example, were witnessed in 2008 during the global financial crisis, when basically overnight, tens of millions of migrants went back to the countryside from the cities. The government's stated concerns seem quite overblown. On balance, jobs and opportunities are still primarily in cities. So most migrants will head back to cities from the countryside after the Lunar New Year. Having said that, there really is an attitude shift amongst migrant workers. And I think for officials who are gunning for strong economic growth, it's that shift that's actually more troubling.
- [14:45]
Jason Palmer
And so how does that explain the concerns that they have this time around?
- [14:49]
Simon Rabinovitch
Well, so I think what it does is it illuminates that clearly times have changed. And so I think there's two crucial differences. One is the downturn is very different. 2008 was a sudden shock to the system, people thrown out of work overnight. This time around, China is dealing with a years long downshift, one that feels more permanent. The property sector has been in a correction for the last five years. That's reduced the construction jobs that historically have really absorbed a lot of migrants. So it's not so much a sudden flood back to the countryside, but a persistent trickle back. And at the same time, the idea that the countryside provides a safety valve that is less true today than it was 15 years ago. Many rural citizens, including Mr. Zhao, who I spoke to, have leased their land use rights, and so they no longer have land that they can work. So the government's real underlying concern isn't this sudden rush of people back to the countryside, but the idea that little by little people are heading back because the jobs in the city simply aren't what they used to, and that when they get back to the countryside, they basically end up languishing there.
- [16:03]
Jason Palmer
And so if the government is across this problem enough to be issuing these warnings, what else is it doing to sort of even things out for migrant workers.
- [16:11]
Simon Rabinovitch
So I think we can identify a few different strands to the response at the macro level. Although there's not a big stimulus as there had been in the past, they don't have the fiscal space for that. There is still ongoing investment in infrastructure. This year, there's a big push to spend on waterworks. The hope is that will generate jobs for migrant workers. You then have another central government push that's been picked up by provinces, which is to invest a lot in rural areas to attract migrants who have capital and skills to come back to invest in factories. So the second place that I went to, Tianmen, in Hubei, you can see that historically a lot of migrants had left there, gone to the south of the country to work in garment factories. Over the past number of years, a number of garment factories have been opened up locally. So there are some job options for people who return to Tiananmen that didn't used to exist. And the third response, which is a very, very local one, is that you see places that are having migrant workers coming back, trying to set up job centers for them. The problem there is that although the government is very well intentioned and they're trying to match people with jobs, there simply are not enough jobs available if you begin to have thousands upon thousands of migrants returning to these small towns.
- [17:27]
Jason Palmer
What about the concerns, though, of the migrant workers themselves? You said there was this attitude shift.
- [17:32]
Simon Rabinovitch
That's right. And it really is a generational divide. Many of the migrants that you still see traveling across provincial borders, going for work in factories, doing the kinds of jobs that historically have been associated with migrants. Many of them are actually older migrants, younger migrants. They are more interested in work, life, balance. Many of them are working in the service sector and restaurants or as delivery drivers, not necessarily in factories. And for them, the economic slowdown has really presented this unfamiliar dilemma, which is that there still is this temptation to move to big cities that are far away because that's where pay is better. That's where there are more jobs. But given the downturn in China, the prospects in those big cities are not as good as they once were. Meanwhile, back home, there's a recognition that there's more to life than work alone. One guy who I spoke with, He Gaoqiang, he's in his early 30s. He, six, seven years ago, had traveled farther away for work. But then after his wife had their first child, he decided that he no longer wanted to be so far away from home. Since then, he's been staying in Zhoukou working in the property sector there. His earnings are way down compared to where they used to be. But his reasoning was that anywhere he was in China, wages would be down, and he had seen what his father had gone through. For decades, his father had been traveling to faraway places to earn a bit more money, but it meant that he basically grew up raised by his grandparents, and that was not something that he wanted to see his children go through.
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Jason Palmer
Thanks very much for joining us, Simon.
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Simon Rabinovitch
Thank you, Jason.
- [19:29]
Alexandra Seorch Bass
I, like millions of people have been watching heated rivalry.
- [19:33]
Commercial Narrator
Canada, Shane Hollander.
- [19:34]
Jason Palmer
Shane Hollander, I wanted to introduce myself.
- [19:37]
Simon Rabinovitch
Okay.
- [19:38]
Commercial Narrator
And Russia's Ilya Rozanov.
- [19:41]
Jason Palmer
You're an awesome player to watch.
- [19:43]
Simon Rabinovitch
Yes.
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Alexandra Seorch Bass
It's a Canadian show about two rival hockey players that has gained unexpected popularity worldwide.
- [19:52]
Rosie Blore
Alexandra Seorch Bass, you're our culture editor. I was not quite expecting you to be suggesting something quite so smutty. Tell me what heated rivalry is about.
- [20:04]
Alexandra Seorch Bass
Well, I should say that it takes a lot to shock me, but part of what interested us about this is what a phenomenon it's become. The story is about two rivals who turn lovers. It is a romance novel that has been adapted into television. That set on the ice and then in the bedroom, they don't hold back on the sex. And some of the scenes, as we were trying to decide what to include, would probably violate YouTube's terms and policies. But here is one we could use.
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Simon Rabinovitch
Touch yourself.
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Jason Palmer
What?
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Simon Rabinovitch
Show up for me. I want to watch you.
- [20:45]
Jason Palmer
You what?
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Simon Rabinovitch
It's my special day, Hollander. I want to watch.
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Jason Palmer
I've never.
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Simon Rabinovitch
No shit.
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Jason Palmer
Fuck you. Give me some vodka at least.
- [20:55]
Simon Rabinovitch
No, no, no. Vodka is for after is your reward.
- [20:59]
Alexandra Seorch Bass
So as you can see, it's steamy stuff. Rosie, people love the show. Right now, it's the second most in demand show globally popular in markets like America, Australia and the Philippines.
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Rosie Blore
Right. So not really hockey or indeed the ice. It's just the hot stuff. So who's actually watching it?
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Alexandra Seorch Bass
It's popular in the gay community, but perhaps surprisingly, it's also popular among straight women who have been not only watching episodes but rewatching them. And the effect is not just being felt on streaming networks. It's also being seen in the real world. We've seen a boost to hockey ticket sales. There's a heated rivalry effect where on StubHub, hockey ticket sales surged 40% since the show's debut in America. We're just about to start the Winter Olympics. So I think hockey is having its moment and it's going to attract more viewers this year.
- [21:53]
Rosie Blore
So, Alexandra, you've told me what lots of other people think about it. What did you think?
- [21:57]
Alexandra Seorch Bass
I found it a fascinating window into what's resonating with viewers right now, and I think it will feel familiar to people who like romance and dramas. You have a tenderness. Despite the steamy sex scenes, it's ultimately an emotional story. I think there's a little bit that's on the cloying side. You have lines like, you're so beautiful. And the response being, I can't believe you like me. I think the reason that straight women are enjoying watching the show is also because it deals with the emotions that you would see in a traditional romance. People are feeling out of place. They're worried about rejection. They're discovering themselves. So there's a relatability to the drama, even though the world of hockey and even the world of gay dating might be foreign to some of the people who are watching it.
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Rosie Blore
Romance with a lot of soft porn on the side.
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Alexandra Seorch Bass
You said it not.
- [22:53]
Rosie Blore
I hope you haven't spent your entire week watching and re watching Heated rivalry. What else have you been seeing?
- [23:00]
Alexandra Seorch Bass
This has been an interesting week for the release of a long anticipated documentary called Melania. And of course, we all know her with her last name as well. It's Melania Trump.
- [23:13]
Rosie Blore
Everyone wants to know. So here it is. Is it worth it?
- [23:19]
Alexandra Seorch Bass
Our Lexington columnist, James Bennett had a really funny take where he said, thank goodness this is not Eva Peron, referring to the first lady of Argentina, who was a populist, extremely approachable and warm. Melania Trump is exactly the opposite, and that is certainly true. On screen, she is remote. It's not entirely clear that she even seems comfortable starring in her own documentary, but I think it's one that many people will not enjoy, which is why we have it as a what not to watch this week. But I will say that it was snapped up by Amazon, which was willing to pay three times more than anyone else was willing to for the rights to the documentary. A stunning $40 million, which is unheard of in the world of documentary. And it's a fascinating window into the current business climate and Hollywood.
- [24:14]
Rosie Blore
So we had steamy sex, and now we got a bit of ice after all. Alexandra, thank you very much.
- [24:20]
Alexandra Seorch Bass
Always a pleasure, Rincey.
- [24:39]
Rosie Blore
That's all for this episode of the Intelligence. The show's editors are Chris Impey and Jack Gill. Our deputy editor is Sarah Lanyuk, and our sound designer is Will Rowe. Our senior producers are Henrietta McFarlane and Alizer Jean Baptiste. And our senior creative producer is William Warren, our producers are Anne Hannah and Jonathan Day, and our assistant producer is Kunal Patel. With extra production help this week from Emily Elias. The weekend Intelligence is taking taking a break while we bring you the third series of Boss Class, our podcast on the world of work. See you back here for that tomorrow.
- [25:24]
Commercial Narrator
Why get aaa? Because bad roads, bad tires and bad luck. Out of gas, locked out or in a ditch, stuff happens with 24. 7 roadside assistance AAA's got your back no matter who whose car you're in. Join today@aaa.com AAA expect something more. Roadside assistance is provided by independent facilities contracted by aaa. Coverage in taxis, limousines and other ride sharing conveyances is excluded. 2024 AAA US Market Truck National Surveys offers terms, conditions and policies are subject to change without notice. Visit AAA.com for details.
- [25:54]
Alexandra Seorch Bass
Imagine the merging of trusted intelligence into a unified experience. Imagine collaboration amongst teams and across continents. Imagine an empowered ecosystem designed to deliver actionable insights that inspire growth and sustainability.
- [26:10]
Rosie Blore
That's the power of the Connect Industrial.
- [26:13]
Alexandra Seorch Bass
Intelligence platform to help you see further innovate faster, accomplish more.
- [26:19]
Rosie Blore
That's the connect effect. Learn more at thatstheconnecteffect.com.