The Week in Breakingviews: Appetite for disruption
BREAKINGVIEWS-The Week in Breakingviews: Appetite for disruption The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Peter Thal Larsen
LONDON, Oct 17 (Reuters Breakingviews) - Welcome back! A week ago I highlighted some of the cracks in the foundations of the AI boom. Those fractures have widened as debt investors fret about neocloud data centre operators and Anthropic reports slowing revenue growth. Temporary wobble or turning point? Email me with your views. If this newsletter was forwarded to you, sign up here to get it in your inbox every weekend.
OPENING LINE
“The US commute is becoming an antique roadshow. Squeezed by high vehicle prices and borrowing costs, drivers are buying older cars with loans that last as long as eight years.”
Read more: The $1.7 trln auto loan market heads for a crash
FIVE THINGS I LEARNED FROM BREAKINGVIEWS THIS WEEK
The average price of an Anthropic token has dropped 68% since the start of 2025. (The AI deflation trap)
JPMorgan JPM.N added just $50 million to its allowance for consumer loan losses in the third quarter. (Jamie Dimon remains gloomy)
Mukesh Ambani’s $102 billion Jio Platforms is set to go public on about the same valuation as rival telco Bharti Airtel BRTI.NS. (IPO still makes sense)
Qatar’s GDP is set to shrink by 16% this year. (But rebound in 2027)
Dating app Bumble has a quarter fewer paying users than in 2024. (AI to the rescue?)
CREATIVE OBSTRUCTION
In the US government they are known as bus people. These are the low-key functionaries on whom the state depends. “Bus people are people who if they are hit by a bus the government stops working,” a political operative states in Michael Lewis’s new book.
Civil servants are the unlikely heroes of “Blockers: Rebels in the Deep State”, the author’s inside account of the assault on US bureaucracy by Donald Trump’s second administration and Elon Musk’s Department of Government Efficiency.
The tale is something of a departure for Lewis, who has previously tended to favour plucky underdogs taking on an entrenched consensus. Think of the sceptical fund managers of “The Big Short”, or the data-obsessed baseball administrators of “Moneyball”. A decade ago, Lewis might have been more sympathetic to the ignorant laptop-wielding twentysomethings dispatched by Musk to root out waste and inefficiency in the US bureaucracy. Instead, the short-lived DOGE debacle has helped draw a definitive line under a three-decade celebration of disruption as a positive force.
The word used to have mainly negative connotations. Then the tech revolutionaries of Silicon Valley grabbed the public imagination. Harvard professor Clayton Christensen lauded the power of disruption in his 1997 book “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”. Suddenly, everyone with a smartphone could be a business revolutionary. Technological evangelists preached the benefits of applying the same approach to the core functions of the state: education, healthcare, defence and so on.
Looking back, the surprise is how little resistance they faced. Even the 2008 financial crisis, which exposed the extreme fragility of modern banking, only encouraged more reckless experimentation with cryptocurrencies. It took a global pandemic, a trade conflict, and the knock-on effects from actual wars in Ukraine and Iran to remind many citizens of the importance of basic administrative competence.
At the same time, Silicon Valley revealed its reckless instincts, which are now on daily display with each leap forward in artificial intelligence. Consumers might welcome AI agents that help them find cheap flights, but are unlikely to tolerate rogue bots filing false homicide tips with Philadelphia police, as Anthropic admitted last week. Back in 2016, Saudi Crown Prince Mohammed bin Salman put on jeans and visited California to show his determination to modernise the kingdom. Business leaders praised his disruptive vision. Yet it’s hard to attract $100 billion a year of overseas investment when Houthi insurgents are blowing up Riyadh’s main airport. Even executives who shrugged off the killing of the journalist Jamal Khashoggi will avoid the Saudi capital when their own safety is in doubt.
This does not mean the government is necessarily efficient. Large sovereign debts and rising interest rates give politicians a strong impulse to seek more savings. The waves of “creative destruction” that Joseph Schumpeter described back in 1942 remain a feature of capitalist economies. Yet that system also depends on the state continuing to perform a wide range of everyday functions. It’s time we spent less of our attention on the self-professed disruptors, and more of it celebrating the bus people.
CHART OF THE WEEK
The latest war in the Gulf is doing serious economic damage. The leading economies in the Middle East are all set to shrink this year. The hope is that a peace deal will allow for a big bounce in 2027 as oil shipments resume and tourists return. Yet a prolonged conflict could undermine the region’s plans to reduce their dependence on fossil fuels, write George Hay and Afiq Fitri Alias. Meanwhile, the gusher of investment cash is dwindling as current account surpluses shrink.
THE WEEK IN PODCASTS
Did you know that almost all our data zips around the world on 600 fibre-optic cables laid on the ocean floor, most of them no wider than a garden hose? Neither did I until I read Katja Bego’s “Deep Connections: The Hidden Battles to Control Subsea Cables”, a new book about this fragile underwater network. On The Big View we discussed how subsea cables evolved, how they have been weaponised in the past, and whether the modern global network can survive rising geopolitical tensions.
Imported Chinese cars are the current focus of trade tensions with the European Union. Aimee Donnellan beamed into the Viewsroom from the Paris Motor Show this week to debate the cap on Chinese imports – and whether European carmakers can survive the onslaught – with Antony Currie and Katrina Hamlin.
PARTING SHOT
The main surprise about this year’s Nobel Prize in Economics was that the winners did not already have one. Robert Hall and Michael Woodford were instrumental in reconciling the two main schools of the dismal science into what became known as the New Neoclassical Synthesis. This paved the way for the distillation of major economic problems into three equations, and the proliferation of models which remain influential today. Yet theoretical elegance came at the expense of practical utility, argues Jon Sindreu. Today, a messier approach probably allows for better policymaking.
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(Editing by Aimee Donnellan; Production by Oliver Taslic)
((For previous columns by the author, Reuters customers can click on LARSEN/peter.thal.larsen@thomsonreuters.com))