The Economist. Hello and welcome to The Intelligence from The Economist. I'm your host Rosie Bloor. Every weekday we provide a fresh perspective on the event shaping your world.
I don't know where you stand on luxury handbags or designer socks, but apparently they're selling less well than they used to. Our correspondent took a hardship posting to find out what's going on with all those high heels and fancy frocks.
And in Australia, cane toads are considered such pests that communities hold social events to engage in mass calls. If that isn't your idea of fun, don't worry. Scientists are now proposing some less violent solutions to the spread of this invasive species. First up, though.
So far, Republicans in Washington appear ready to confirm Donald Trump's picks to run the sprawling federal agencies. But some of his particularly controversial nominees are getting their grillings this week. Trump tapped Robert F. Kennedy Jr. to lead the Department of Health and Human Services. Republicans on the health committee left the hard questions to those on the other side of the political divide.
I happen to believe that climate change is real, it's an existential threat, and it is a healthcare issue. Donald Trump thinks that it is a hoax originating in China. Question is, in your judgment, is climate change a hoax or is it real causing devastating problems? President Trump and I, from the beginning, from our first meeting, agreed to disagree on that issue. I believe
Republicans have been so supine recently that RFK's comments almost counted as resistance. Today, Trump's most contentious choices will be in the spotlight, the new head of the FBI and for director of national intelligence. If Republicans are willing to support even them, will they ever push back? Adomoneel is our Washington correspondent.
We don't know exactly what shape it will take. But the early returns so far show that this version of Donald Trump, the second term version, is dominating Congress in a way that he wasn't able to eight years ago. So, Adam, we've got a lot of people left to be confirmed. Who are the big ones?
It's still early. Only about a third of the cabinet has come up for a confirmation vote, and they've all been approved. I think the big ones that we would consider would be RFK Jr. at Health and Human Services, Tulsi Gabbard to be Director of National Intelligence, Cash Patel to be the Director of the FBI, and you might include Russell Vaught at the Office of Management and Budget. Okay, so Tulsi Gabbard, we've talked about on the show before, but remind me why she is such an unconventional pick.
On paper, Director of National Intelligence is in charge of the intelligence community. But one telling thing is that the former DNI Director of National Intelligence is now the CIA Director because it's a cooler job. But what the Director of National Intelligence is supposed to do is synthesize throughout all of the different agencies and bureaucracy intelligence products for the president.
And Tulsi Gabbard is a very controversial pick because she sort of existed outside of the mainstream when it comes to the intelligence community and how the United States conducts foreign policy. Tulsi Gabbard has spoken highly of Edward Snowden. She went and met Bashar al-Assad. And throughout her career in Congress, she often parroted Russian propaganda. This is not the sort of person who you would typically imagine would be a running America's vast intelligence operation.
The committee that will vote for her first is the intelligence committee. And because of the nature of that committee, a lot of the work that they do is in private. They have secret hearings because they're discussing intelligence. And so a lot of their votes also are not done publicly. And that means that Republicans will not necessarily have to come out publicly and say that they oppose her. You could have a situation where a gabbard gets eight votes, but 12 people say they voted for her because no one can actually prove one way or the other.
And the Trump team has wanted to change that. They've said, no, the Gabbard vote should be made publicly because they know that there are Republican senators there will be deeply skeptical of her, but don't necessarily want to rub Trump the wrong way on this vote. So the response to Tulsi Gabbard is going to be interesting in showing us how Republicans are dealing with the new Trump picks. What about Cash Patel?
I spoke to Cash Patel about a year ago, and I think at the time his title was Senior Advisor to Donald Trump for National Security and Defense. And what struck me about that conversation, it was very brief, it was just sort of on the sidelines of a Trump event, was that Cash Patel is not really a details guy. I asked him a question, basically querying him a little bit about how big he thinks the defense budget should be. And he said, well, you know, that's not really my job, even though it's sort of in his job title.
Cash Patel, he's a former federal prosecutor. He has some experience in government at different levels, but it seems like his greatest qualification is loyalty to Donald Trump. And he is deeply skeptical of the FBI. So he's not someone who wants to come in and methodically reform it or fight against the bureaucracy. He's someone who's a brawler who wants to come and blow everything up. And that, I think, gives some senators a little bit of pause. So if these ones go through, is that a sign that Republicans are going to be pretty supine when it comes to what Trump wants?
The president gets a bit of deference when it comes to who his advisors and who his top lieutenants are.
You see this in someone like Marco Rubio who won 99 votes in the United States Senate. He was highly qualified to be Secretary of State and Bernie Sanders voted for him. That's not because Bernie Sanders agrees with every position that Marco Rubio takes on any particular issue. It's because the idea of Senate confirmation is that the senators evaluate someone and they may say, okay, we have policy differences, but you are qualified morally, ethically, and professionally to serve in this position.
So in that sense, it's not surprising that most of Trump's nominees who on paper are very much qualified are able to do it. The question is, when Donald Trump really pushes the envelope with a choice like Tulsi Gabbard or a choice like Robert F. Kennedy Jr. or Cash Patel,
On those choices, that's when historically the Senate would step in and say, OK, you may want this guy, but he's clearly unfit. That happened last year when Donald Trump initially wanted Matt Gates, who had a whole bunch of ethical problems as a congressman. He wanted him to serve as attorney general. And his nomination died very quickly when it was clear that more senators would not approve him.
The question, though, and I think one really interesting point here is that there are 100 senators, 53 of them are Republicans. That means that you need four Republicans to vote against a nominee if every Democrat opposes that nominee. And the trouble is no one wants to be the fourth person. So someone like Pete Haggseth, the defense secretary, who had a whole host of issues, very unqualified by the traditional way of looking at things,
Three Republican senators voted against him, and there was a fourth, Tom Tillis of North Carolina, who seemed to be very strongly considering it, but he ended up voting for Hegsef. And I think that if there were three or four other senators who were in the same position as Tillis, Hegsef would not have been approved. But being that one Republican that all of the MAGA world can focus its ire on, that's a very difficult position to be in. And that's where Donald Trump is able to push through these more controversial choices.
And one thing I would also keep in mind is that Republicans don't have limitless patience for Donald Trump. Parting the people who went into the Capitol and beat up a police officer violently, I think was a mistake because it seems to suggest that's an okay thing to do.
You can look at someone like Lindsey Graham, who is very accommodating to Donald Trump and has a positive relationship with him, but something like pardoning the violent offenders on January 6th, that doesn't really go down well with a lot of Republicans in Congress. But the legislature isn't the only place where Trump could face resistance, right?
Exactly. The Senate, and by the way, it's only one half of Congress that has to say on Donald Trump's nominations, but outside of that, there are other forces that are going to stop him. I think the biggest one is the courts. You saw Donald Trump froze trillions of dollars of federal payments for grants and other programs, and almost immediately a U.S. district judge stepped in and said, well, hold on, you can't do that.
That's because Donald Trump will try to test what he can get away with through executive orders and the courts will robustly push back on that. And I'll say another example outside of the legal system is just pure politics. Donald Trump also froze the disbursement of foreign aid. Very much fits with his America first approach, but immediately stories came out and I think a lot of people didn't realize all of the good things that America does in the world like dispersing HIV medication and
That didn't require a court stop at Marco Rubio, the Secretary of State stepped in and said, life-saving programs, those are going to continue because they don't want bad headlines. So it's going to be a mixture of Congress, the courts, and also public opinion that can reign in Donald Trump as he tests the bounds of his power. Adam, thank you for talking to me. Thanks so much for having me.
And you can hear more about Trump's pick for his national security team on our U.S. politics show checks and balance tomorrow. You have to be a subscriber to listen. You know what to do.
So for the last 20, 30 years, the luxury industry has been booming. It's almost been something you don't question. Luxury sales, stuff like handbags, high heels, it just keeps going up and up.
But last year, this was shaken up. Bain, the consulting firm, which produces some of the best data on this, reckons that sales of personal luxury goods actually fell about 2%. And that's quite a lot in an industry. Some of the biggest listed companies in Europe are luxury stocks. So this really matters. But not every brand is struggling.
So what's going on? There are brands like MS, those that target the richest of the rich that are doing much better than other brands like, let's say, Gucci. This month, Rishmont, which is a Swiss luxury group, it owns Cartier, they posted better than expected results. But other big luxury groups, you know, LVMH caring, they have been struggling. So it's a bit of a turning point for this industry.
What's the reason for that divergence? Why are some brands doing better than others? There's been two big reasons why the luxury industry has been booming for decades. The first quite simply is globalization. So people all around the world in emerging markets in particular were getting rich and they were getting a taste for designer Git. You started off as a designer brand, appealing to the Western elite, to people in London, New York, Paris. And in particular, China became a new market.
So in 2000, there were about $39,000 millionaires in China. According to UBS, by 2023, there were 6 million. That's more than any other country other than America. It's actually twice as many as in Britain, the third biggest country for millionaires.
Okay, so that's globalization, and you said there was another trend. Second trend has been democratization. Not everyone can afford the most expensive designer handbag, but in order to expand their market, quite a lot of these luxury brands were introducing what they'd call accessible luxury, aspirational luxury, as well as their £1,000 handbag, said sell bracelets and t-shirts and socks and baseball caps that
Maybe the upper middle class could afford. For me, the turning point was Gucci, which started selling white socks for $200. Now, that seems like a ludicrous amount of money for a pair of white socks to me, but compared to everything else they sell, that counts as entry-level pricing. Then you had brands like Armani and Valentino that were launching these cheaper sub brands that had more casual attire, a little bit more affordable. And it's these brands that have really fueled the expansion
of luxury. And why is that strategy not working anymore? Perhaps a problem is that people are saying that accessible luxury is just an oxymoron. The idea of luxuries, it's meant to be something unattainable. And the sense you got in recent years is that the really high-end shopper didn't really want to be buying from a label that also produces aspirational products.
At the same time, since COVID, a lot of brands were hiking their prices. There's things like a Chanel handbag index, and they've just been going up and up. After COVID, you had a boom in shopping. People were bored at home. They had government stimulus, meant that they had a little bit more cash in the bank, and they were spending, and the brands were just hiking prices. And again, it was for the same item. The same handbag one season to the next would be much more expensive, and customers seemed to have had enough of that.
The third really big problem is just that we are in a consumer crunch. Middle-class shoppers in the West have been squeezed by high interest rates, they're worried about jobs. Luxury spending in China is hugely affected by the housing crisis, the general economic downturn there, and brands that were trying to expand their market by trying to go into the middle class, by trying to woo the aspirational shopper.
They are just feeling the economic cycle. They're feeling the effects of the downturn in the way that very, very high-end brands that really only serve the richest of the rich don't feel it at all. So you're saying that greater exclusivity is the answer.
Well, it can't be the answer for everyone. So one brand that I interviewed for this, I went to meet Brunello Cochinelli, he's this Italian designer, he sells $6,000 cashmere sweaters. And he's seen sales increase 12% year on year in the first nine months of 2024. MS, which makes some of the world's most expensive handbags, it had revenue growth of 14% over the same period. So you're seeing that these brands that only appeal to the very rich, they're not affected by economic cycles.
But the fact is that market is only that big. Not every brand can appeal only to the richest of the rich. So does that mean we're finally going to have a bit of a crunch in the luxury market and some brands going bust or at least getting smaller? So I think the truth is that you'll never really have the end of luxury. As long as there are rich people around and there's more and more rich people, they'll want designer clothes and fashion and accessories that
set them apart. And you've already seen brands doing things to try and stay ahead. Mew Mew, which is owned by Prade, is perhaps the best example. It's been pushing the boundaries. It's been creating new products. It's been having these clever campaigns that really get attention. For example, they had a really high spending customer. I think she was in her 70s and they got her onto the catwalk. Its approach is actually working. Their sales doubled in the first nine months of 2024.
There's also a lot of brands that are trying to bring in new creative talent. But take a Veneta, Celine, Chanel, Givenchy, they've all brought in new creative directors of late. And there are ways in which you can make aspirational luxury work, that that's not sort of a contradiction. I spoke to analysts at Bernstein and they talked to me about some very simple strategies, things like
If you're a big brand and you don't want high-end customers to be put off by your lower-priced products, just have affordable makeup, but expensive handbags. You can do other things like restrict volume. So if you're going to have a more affordable version of your fancy watch, well, just make that in a smaller number so that it's still comfortable because it's hard to get your hands on. So there are strategies by which this idea of affordable luxury can work, and brands are already playing with it. I think
It's just a question of time to see which ones succeed and which ones perhaps falter. Avantica, thank you, great to talk to you. Thanks for having me Rosie.
The great cane toad bust is a repositive family-friendly community event in Australia that just happens to centre around the mass killing of toads. Luke Letgo writes about science.
And what happens is people go out from Darwin to Brisbane and they go out into the night with a torch and a bucket and they pick up adult cane toads and put them in the bucket and then they put them in a refrigerator for 24 hours or more and then they freeze them to death.
It's done very humanely and it's done for good intentions. These are notorious invasive pests, but Australians are now looking into more modern scientific innovations that might make the removal of these amphibious pests a bit more efficient and effective. Luke, how prolific is the cane-toed problem to end up with things like a family event centred around a mass killing?
The cane-toed problems pretty significant, but it's probably worth explaining how they got into Australia in the first place. So they originate in Latin America. In 1935, 101 of them were brought over to Australia in the hope that they would control the pests of sugar cane. They didn't really do this, but thousands more of them were released and they bred and they spread. And now it's estimated that well over 200 million cane toads
are thriving in Australia right across the tropical north of the country and down the east coast as well past Brisbane into New South Wales.
And why are they such a problem? There's a few problems. So native Australian wildlife have very little immunity to the toxin that the cane-toed releases. So we're talking crocs, some of Australia's most venomous snakes, and also this really adorable charismatic carnivorous marsupial called a qual, which I guess is a bit like a ferret.
All of these predators, when the cane toad arrives, their population crashes and that really skews the ecosystem, then there's all sorts of other knock on effects. So what happens when they reach cities? So when they reach cities and towns, they feel quite at home. And one of the reasons Australians really hate cane toads is because they poison their pets. So an average sized dog, if it eats an adult cane toad, could be dead within 15 minutes.
So are cane-toed culling parties really the best way to handle this? Not if you're just culling the adult toads. That's been happening for years. And actually the invasion front of toads is still accelerating across Australia. Studies suggest that toe-busting at best can take out 47% of the adult toads in an area, but they're prolific breeders. So they can produce up to 30,000 eggs in one go.
So that's where the scientific innovations come in. There's two in particular. One is tadpole trapping and the other which sort of builds on this tadpole trapping idea is gene editing. Okay, explain to me what tadpole trapping is. So what researchers have discovered is that in Australia, because toe populations are so dense and the competition is so strong, the tadpoles have turned cannibal and they start eating the eggs of other cane toads.
So scientists have decided to use this. They've isolated a chemical signal that attracts the tadpoles to the eggs, and they've used them to make lures, which they put inside traps, which can then be used to extract huge amounts of tadpoles, hundreds of thousands, during the Great Canto bust out of local waterways.
Wow, that's amazing. And you said that gene editing builds on that. Yeah, so there's a group in Macquarie University who have taken the idea of these tiny cannibal tapholes and they've developed what they're calling Peter Pan tapholes because they have disabled the genes that allow the tapholes to grow up, like Peter Pan never grew up.
So, what you have there is these cannibal eating machines that you can put into ponds and for years, hopefully, they will keep the pond clear of toed eggs. So, it's not permanent, the tapas will eventually die and need to be replaced, but it's far less labour-intensive than, say, the tapal trapping, even.
So Luke, it sounds like Australia's never going to be free of the cane toad. Well, never say never, but at the moment it's all about holding that front line to stop the toads getting into some of the most beautiful natural wildernesses in Western Australia, for example, or into the urban centres that they haven't already reached. Sydney would be the biggest example.
But for the first time in a long time, there's a belief that something big could be done about cane toast to bring them under control. The Peter Pan tadpoles have got the green light because they're a very cautious use of genetic technologies. You're just knocking out genes rather than adding new genetic material. And even if you were, the tadpoles would never grow up and spread those genes in a wild population, which is where a lot of the risk is involved.
And what we've learnt with cane toads could then be applied to other invasive species in all sorts of places. Absolutely fascinating stuff Luke, thank you so much. You're very welcome Rosie, thank you.
Subscribing to Economist Podcast Plus helps make our journalism possible. Thank you. Search Economist Podcast Plus for a free trial. That's all for this episode of The Intelligence. Let us know what you think of the show you can get in touch at podcastateconomist.com. We'll see you back here tomorrow.