Deepfake faces generated via artificial intelligence (AI) have become so realistic that they routinely fool people, with some research suggesting there may be US$40 billion worth of deepfake-related fraud annually by 2027.
Not only do most people struggle to spot AI faces, but as long ago as 2023 we discovered some AI faces are “hyperreal” – they look more real than actual human faces. We also found people are overconfident they can spot AI faces, with the most confident people making the most errors.
But it turns out most people can learn to spot AI faces with an hour or so of practice. In new research published in PNAS, we show there’s a straightforward way to improve detection of deepfakes, by training people to pick up the tell-tale clues through experience rather than direct instruction.
The difference between human and AI faces
In our early research, we discovered a key difference between AI and human faces. AI faces are hyperaverage.
This means AI faces tend to be more symmetrical, proportional and attractive than human faces. But they’re less expressive and memorable – less likely to stand out in a crowd.
Intriguingly, people can accurately and reliably judge these qualities, but frequently misinterpret the clues. For example, people often think that faces that look a bit odd are AI-generated, when in fact human faces are more likely to have distinctive, unusual features.
Compared to real faces (left), AI faces (right) tend to be more symmetrical, attractive and proportional, but less distinctive, memorable and expressive. Nightingale / OSF, CC BY
Although most people struggle to decide whether a face is AI or real, there is one group who are naturally good at picking up on these clues. So-called super-recognisers, who have exceptional human face perception, seem to be attuned to hyperaverageness, making them better at spotting AI faces.
This made us wonder if, for those of us who aren’t super-recognisers, AI detection abilities can be trained like other forms of perceptual expertise.
Learning to spot AI
In our first study, we invited 45 participants into our lab at the Australian National University, and asked them to rate around 100 faces on six qualities that can be used to tell AI faces apart from real ones: distinctiveness, memorability, proportionality, symmetry, attractiveness and expressiveness.
We didn’t tell participants how these clues might help them distinguish an AI face from a real one – they had to figure that part out for themselves.
We told participants which faces were AI and which were human, but we didn’t tell them that the AI faces were more symmetrical or less expressive, for example. They had to learn these clues through experience rather than direct instruction.
Before and after training, we tested participants’ ability to tell AI faces apart from human ones with new faces that were not used in the training.
Training works
In one test, participants were shown three faces – two human and one AI – and asked to select the face that was AI. On this task, average accuracy doubled from 40% before training to 80% afterwards.
Impressively, all participants improved in their AI detection abilities and several achieved close to 100% accuracy. Participants also became faster and more confident in their correct judgements.
With training, people get much better at picking AI faces out of a group with human faces. In this example, the middle face is AI generated. Nightingale / OSF, CC BY
To test the robustness of these findings, the Different Minds Lab at the University of Victoria in Canada conducted a replication of the AI detection training with Canadian participants.
The Canadian lab obtained results that were as strong as those reported in the original Australian study. This shows the training is reliable and can work for different groups of people.
The training was also just as effective when it was administered online rather than in person, which suggests it could be a cost-effective remote intervention in deepfake detection.
A promising start
But this doesn’t mean we’ve solved the AI detection problem. Our training used faces produced with one particular generative AI model, called StyleGAN3.
This is one of the most realistic face generators available, but the technology is advancing rapidly and there are many other models.
Our method has potential to adapt to new models by updating the training images and using multimedia, but we don’t yet have evidence that this will work.
The clues we found for spotting AI faces may shift for other models. And other important questions remain: do the training benefits hold up over time? Is the training effective for people of all ages, including older adults or children?
How to improve your chances of spotting AI faces
If you want to get better at recognising AI-generated faces, looking at a lot of examples is a good start. You can see plenty at websites such as Which Face Is Real or This Person Does Not Exist.
While you’re looking, bear in mind the six key factors we identified:
how distinctive is the face?
how memorable is it?
how proportional is it?
how symmetrical is it?
how attractive is it?
how expressive is it?
This exercise may improve your deepfake radar. But the more important takeaway is that AI deepfakes are improving very quickly – they can easily fool us, even if we think we can spot them.
The clues are no longer obvious: they are not based on specific details but on facial impressions which people form rapidly and naturally, but which can be misleading.
At the same time, there is hope. We have shown it is possible to train people to detect AI faces. By combining our human-centred approach with algorithmic detection, we may yet keep up in this cat-and-mouse game of advancing technology.
Interested in undertaking the AI face detection training? You can register here.
Music from Kylie Minogue, John Farnham, INXS, Midnight Oil, AC/DC, Tones and I, Gotye, Ben Frost, Nick Cave, Tame Impala, Parkway Drive, The Living End and Vance Joy has been found in a database of 12 million songs used to teach artificial intelligence.
This database, listing songs available on YouTube, is used by AI systems to train the ability to recognise and create music. AI relies entirely on these massive databases, trained on almost everything ever placed on the internet. And Australia’s inclusion in these databases is huge. Kylie alone has 182 songs in just one database.
The volume of Australian music used to train AI has caused significant anger in the Australian music industry, driven by the knowledge that “AI for music creators” platforms such as Suno create as much music as Spotify’s entire catalogue every two weeks.
Dobe Newton, co-writer of folk classic I am Australian and member of the Bushwackers, has music included in the databases. He believes there is “no real ethical nor moral underpinning” to current AI music practices.
Jesse Pattinson of The Delta Riggs is concerned about “the opportunity it will take away from real artists”. Screen composer and APRA board member Caitlin Yeo told me she holds “deep concern for the future of music made by humans for humans”.
She described feeling “violated” when discovering her work in these databases, realising decades of her work had been “hoovered up in a second” to “feed companies offshore that pay no taxes”.
While Australian artists are feeling ripped off, the intersection between copyright law and AI makes proving infringements incredibly difficult.
Copyright and AI
Lawsuits across multiple creative industries have covered how copyrighted books, speeches and even pornography have been used to train AI models.
These actions have led to massive settlements. In 2025, AI company Anthropic paid US$1.5 billion to writers who brought a class action lawsuit over the company’s use of a database of more than 7 million books to train its AI.
But when it comes to proving copyright infringement, the devil is very much in the details, and it may be harder for the impacted musicians to prove infringement than authors.
Crucially, these databases often do not contain any copyrighted material. Rather, they contain instructions on where to download the data from, along with associated information to help AI training.
Legal challenges
The distinction about how the databases are packaged up is not a minor thing.
Previous lawsuits surrounding similar databases found simply listing where copyrighted material can be found is not, by itself, copyright infringement. The infringement only takes place when an AI company uses the data to train its model.
Think of these databases like the map to a safe filled with gold. Having the map itself is fine; stealing the gold is when the law is broken. While we know at least some AI companies have used this data map, and that their training relies upon it, legally establishing use and any copyright infringements is a challenge.
This legal battlefield is complicated by the unique nature of music law.
Copyright protects specific expressions, like a distinct melody or recording, but not a general style. AI developers exploit this loophole. Rather than copying note-for-note, they extract underlying patterns, chord progressions and vocal textures to create a pastiche.
To a creator, this feels like theft. But in the eyes of the law it may just be imitation.
In response to these lawsuits, Suno described its platform as a fair-use training model, saying “learning is not infringing”.
What’s next?
Since artists became aware of these datasets, the international music industry has rapidly coalesced around severalclass action lawsuits and lobbying efforts. In Australia, 4,000 artists signed a petition calling on the government to increase protections for artists and today, artists held a press conference in Canberra to discuss AI’s impact.
There is a fierce tension between fostering innovation and protecting creative industries. But Australia does not have to choose between the two.
The European Union’s AI act forged an alternative path, to prevent AI companies from hiding copyright infringements from artists and rights holders.
From next August, all AI models accessed from within the EU must declare the source of their training data, and comply with local copyright laws, no matter where the AI was built.
These laws may break the veil of secrecy surrounding the AI data usage, and will significantly increase the likelihood of artists being paid when their work is included in these AI models.
The cultural heartbeat of Australia depends upon supporting creatives. Joining or drawing inspiration from the EU’s AI legislation could help protect artists, and ensure they are fairly represented regarding AI works derived from their labour.
At the very least, as Yeo told me, artists “should see a slice of the pie too”.
Birth rates have been declining worldwide since the peak of the post-second world war baby boom. Birth rates have now reached below replacement in most of the world, including Australia. Put simply, populations on average aren’t replacing themselves.
Everyone from Elon Musk to Italian Prime Minister Giorgia Meloni, to the pope have opinions on declining total fertility (or birth) rates – the average number of births per woman.
Overpopulation has dominated popular discourse since the 1960s. While fears of overpopulation remain, especially tied to immigration, concerns have shifted to depopulation and the related economic and national security issues.
Overpopulation fears to depopulation woes
In his 1968 book The Population Bomb, Paul Ehrlich warned the 1970s would bring “people, people, people, people” and an overpopulation “cancer” resulting in famine and war. Human extinction was imminent, we were warned.
Overpopulation-associated human extinction has not come to be.
The global total fertility rate has more than halved since 1950. Average birth rates for OECD countries now sit at 1.46 births per woman, well below the 2.1 required for generational replacement.
World population decline is projected by the mid-2080s. China is now in its fourth year of population decline. South Korea has been declining since 2019 with its near-global record low birth rates. Germany has seen deaths outnumber births since 1972. Japan, Greece, Italy, Cuba and Thailand are also among those in the depopulation club.
Enormous advancements since the 1950s, mostly in health and medical technologies like immunisation, mean humans are living longer. We’re also having fewer children, and as a result populations are ageing.
An ageing population is a mark of success and human ingenuity, but economic systems tend to view ageing societies as problematic.
Workers and working-aged people are essential to maintain a healthy economy. Individual income taxpayers are the top source of federal government revenue in Australia. Too few people of working age replacing those retiring can seriously undermine economic wellbeing, forcing governments to do more service provision with less financial resources.
Below-replacement fertility and its implications for government bottom lines have resulted in Australian politicians calling on Australians to have more babies. “Have one for mum, one for dad, and one for the country”, treasurer Peter Costello famously said in 2004.
In 2020, former prime minister Tony Abbott suggested the wrong kind of women were having children, calling on “middle class” women to have more. Talking the budget, treasurer Jim Chalmers in 2024 said it would be “better if birth rates were higher”.
Human catastrophe of low birth rates
People are increasingly saying the choice to have children is constrained by external factors. Worldwide, around one-in-five surveyed by the United Nations said fears about the future would or has resulted in them having fewer children than they wanted.
Housing affordability, economic stability, gender inequality and climate change present insurmountable barriers for having a much-wanted family.
The lack of choice to have children in below-replacement regions, I’d argue is indeed a human catastrophe. How is it that we’ve allowed society to become so hostile that children are out of the question for so many who want them?
We are confronted with the tough question of who will care for us with the children gone.
Can a human catastrophe be avoided?
The burden of having a family falls on working-aged people, especially women.
A baby bonus or one-off payment is unlikely to change people’s minds and increase the total fertility rate; such payments merely change timing. Instead, increasing total fertility rates requires a comprehensive suite of measures from a policy perspective.
Tackling the big four big domains of housing, the economy, gender and climate encompass issues such as
secure, affordable and appropriate housing
employment and income security
accessible childcare
social and workplace gender equality
climate change action.
People of childbearing age aren’t being hedonistic when making family and fertility decisions. They’re not thinking about themselves, they’re actually thinking about the future world and weighing what that might look like for prospective children.
Loss of hope among people of childbearing age, including fears of being left behind, contribute to overall concerns about an insecure future.
Not only is the human catastrophe of low births rates reflecting more widespread concerns, such as insecurity, it could also be undermining social cohesion.
Rather than an exploding bomb of overpopulation, the world faces an economic and social implosion due to lacking substantive supports necessary to help raise much-wanted children.
Surely it’s beyond time we ask people what they actually need – and give it to them.
As countries around the world look to follow Australia’s lead and implement a social media ban for kids, many are also considering fines as an enforcement mechanism.
This is part of the playbook when it comes to regulating big tech. For example, last month the United Kingdom’s data watchdog fined Reddit £14 million (A$26 million) for unlawfully using children’s data.
In April 2025, the European Commission fined Apple and Meta €500 million (A$820 million) and €200 million (A$329 million) respectively for breaching the Digital Markets Act. And in September, the commission fined Google nearly €3 billion (A$4.9 billion) for abusive practices in online advertising technology.
But fines don’t always work to encourage companies to follow the law. For some companies, “illegal with a fine” is interpreted as “legal for a price”. So what are some other, more effective methods to encourage good corporate behaviour?
Fines can backfire
If fines are not consistent, immediate, and severe, they can backfire. If they do, bad behaviour may increase.
For example, a 2000 study examined the effect of childcare centres in Israel introducing fines for parents who regularly picked their children up late. But instead, these fines actually increased late pick-ups by parents.
Even after fines were stopped, the number of late pick-ups stayed higher than before.
Why? Because when there were fines, they were small (not severe), and parents could wait a month to pay (not immediate). However, parents got the immediate benefit of longer childcare.
Corporate fines often fail because it may be unclear who in the company is directly responsible. Fines can also sometimes be too small to stop bad behaviour by large companies.
After introducing fines, behaviours previously considered socially or morally unacceptable may also be seen as “forgiven” by payment. This can increase bad behaviour.
The importance of unwanted behaviours may also be judged by the size of the fine.
If fines are seen as “small”, violations may also be seen as small, and bad behaviours may rise. Corporations may also see “small” fines as just a cost-of-doing-business.
Importantly, fine size is closely linked to a company’s financial size. For a small company, a fine could seem huge. The same sized fine may seem tiny to a large company. If similarly sized fines are given to companies making different revenue amounts, the companies may respond differently.
Changing company practices can also cost more for some companies than others. This too may affect how they respond to fines.
Furthermore, companies outside a legislative jurisdiction, or that have refused regulators’ demands in the past, may ignore fines altogether.
So if fines alone don’t stop big tech and other businesses behaving badly, what will?
Research shows monitoring companies, and better resourcing regulators, are more effective than fines alone. Consistent regulator inspections combined with education also work well.
A 2025 paper suggests making “stand-alone consumer tech safety research centres” focused on reducing digital harms. This may require technology companies making data and algorithms available to these centres for inspection.
Then, regulators can look at if companies are using important and best practice safety features. For example, checking the images on sites to make sure users do not see harmful content online.
Regulators can also share knowledge with companies about laws and digital safety measures to improve consumer protections.
This cooperative model has been shown to be more effective than fines alone.
A 2016 study about what works when it comes to corporate deterrence found using multiple levers at the same time, such as monitoring, accountability, auditing, and punitive action were the most effective at stopping bad corporate behaviour.
A 2025 paper highlights that increased data transparency from corporations will also improve evidence-informed decisions, ensuring regulation is fit-for-purpose.
To tackle this problem, online regulators must ensure fines are complemented with other policy levers – and that the punishment for bad corporate behaviour is consistent, immediate and severe.
After failing to secure consensus, COP president Andre Corrêa do Lago announced these roadmaps as a voluntary initiative. Brazil will report back on progress at next year’s UN climate summit, COP31, when it hands the presidency to Turkey and Australia chairs the negotiations.
Why now?
These goals originate in the outcomes of the first global stocktake of the world’s progress towards the Paris Agreement goals, undertaken in 2023.
At the COP28 talks in Dubai in that year, there was an agreement to transition away from fossil fuels and to halt and reverse deforestation and forest degradation by 2030.
In the 2025 Land Gap Report, my colleagues and I calculated the scale of this “forest gap” – the gap between 2030 targets and the plans countries are putting forward in their climate pledges.
We show the pledges submitted up until this year’s climate summit would cut deforestation by less than 50% by 2030, meaning forests spanning almost 4 million hectares would still be cut down. The pledges would lead to forest degradation – where the ecological integrity of a forest area is diminished – of almost 16 million hectares. This is only a 10% reduction on current rates.
Together, this equates to an anticipated “forest gap” of around 20 million hectares expected to be lost or degraded each year by 2030. That’s about twice the size of South Korea.
While this underscores the inadequacy of commitments, the analysis is based on pledges submitted up to the start of November 2025, at which point only 40% of countries had submitted an updated plan. Major pledges submitted during COP31, such as from the European Union and China, don’t change this analysis.
A new fund for forest conservation called the Tropical Forests Forever Facility was launched in Brazil, attracting $US6.7 billion in pledges ($A9.9 billion).
The forest fund focuses on tropical deforestation, the leading cause of emissions from forest loss. But it has a key weakness: the limited monitoring of forest degradation, which could allow countries to receive payments while still logging primary forests.
The fund will establish a science committee and plans to revise monitoring indicators over the next three years, creating an opportunity to strengthen its ability to protect tropical forests.
The COP30 leaders’ summit also saw the launch of a historic pledge of $US1.8 billion ($A2.7 billion) to support conservation and recognition of 160 million hectares of Indigenous Peoples’ and local communities’ territories in tropical forest countries.
But global action on forests needs to extend beyond the tropics. Across both deforestation and forest degradation, countries in the global north are responsible for over half of global tree cover loss over the past decade.
Beyond tropical forests
A global accountability framework on forests is needed to increase ambition on climate action, including in countries and regions with extensive forests outside of the tropics, such as Australia, Canada and Europe.
In these regions, industrial logging is a major driver of tree-cover loss but receives far less political attention than tropical deforestation. Wide gaps in reporting – between deforestation and degradation – mean logging-related degradation often goes unreported.
In a recent report, only 59 countries said they monitor forest degradation. Of these, almost three-quarters are tropical forest countries.
The IUCN World Conservation Congress which convened in Abu Dhabi this year prior to the climate talks, passed a motion on delivering equitable accountability and means of implementation for international forest protection goals. This arose from a recognised need to promote greater equity between forest protection standards across countries.
All of this points to an urgent need to tackle accountability in global forest governance. The forest roadmap to be developed for COP31 in Turkey could help drive stronger alignment and transparency across UN processes – from the UN Forum on Forests’ 2017–2030 plan to the Kunming–Montreal Global Biodiversity Framework’s 2030 target to halt and reverse biodiversity loss.
Australia could lead on forests
Australia could help shape global forest ambition in the year ahead. It is currently the only country whose emissions pledge promises to halt and reverse deforestation and degradation by 2030 – a clear signal that developed countries must lead.
As President of Negotiations at COP31, Australia can also work to bring Brazil’s fossil-fuel and forest roadmaps into formal negotiations. But this depends on two things: credible leadership from developed countries and long-overdue climate finance. As a deforestation hotspot with ongoing native forest logging, Australia has considerable work to do to meet this responsibility.
Thousands of the most popular passenger aircraft in the world need immediate maintenance to protect from a problem that injured passengers and caused an emergency landing last month, CNN reported.
Airbus found intense solar storms, like solar flares, could cause pilots to lose control of the Airbus A320 series of planes, including A319, A320, and A321s. About 6,000 of the single-aisle planes, which are the bestselling passenger aircraft in the world, need the repairs.
“Analysis of a recent event involving an A320 Family aircraft has revealed that intense solar radiation may corrupt data critical to the functioning of flight controls,” Airbus said in a statement.
On October 30, JetBlue Flight 1230 - an A320 - was flying from Cancun, Mexico, to Newark, New Jersey when it suddenly dove down in altitude. The pilots made an emergency landing in Tampa, Florida, where about 15 people were taken to the hospital.
Airbus investigated the incident and on Friday told airlines in an “Alert Operators Transmission” that the fix was needed. The company believes it is the only time this specific problem has happened, but says it “proactively worked with aviation authorities… keeping safety as our number one and overriding priority.”
The Airbus A320 series has what’s called fly-by-wire controls: physical movements from the pilot run through computers which, in turn, adjust the plane’s control surfaces.
An airworthiness directive from the European Union requires airlines to make the repairs before the planes can carry passengers again.
Noida: Commuters wear face masks to protect themselves amid smog and pollution on Bhangel Road, in Noida on Thursday, November 20, 2025. (Photo: IANS)
New Delhi, (IANS) Delhi woke up to yet another day of toxic air on Friday, recording an Air Quality Index (AQI) of 385, firmly in the “very poor” category. Air pollution across Delhi-NCR continues to remain hazardous, offering little respite to residents already struggling with a cold wave.
The spike in pollution comes barely a day after authorities lifted the Graded Response Action Plan (GRAP) Stage-III restrictions, which are enforced to curb severe pollution levels. However, the relief was short-lived, as air quality deteriorated rapidly once again. On Thursday, the city’s overall AQI rose sharply to 377, up from 327 the previous day, marking a significant decline in air quality within 24 hours.
Despite the worsening conditions, the Commission for Air Quality Management (CAQM) has clarified that Stage-III curbs will only be reinstated if the AQI crosses 400, which falls under the “severe” category. Until then, authorities plan to continue monitoring the situation without reimposing stricter curbs.
According to the Central Pollution Control Board (CPCB), pollution levels surged steadily throughout the day on Thursday due to persistently low wind speeds. The AQI, recorded at 351 at 8 am, escalated to 381 by 7 pm, indicating continuous accumulation of pollutants over the region.
Meteorologists suggest that the winds remained almost stagnant for most of the day, with only brief movements at 4–5 kmph, insufficient to disperse particulate matter. Forecasts suggest the national Capital is likely to stay in the “very poor” category over the next few days.
Meanwhile, the ongoing cold wave gripping Delhi and nearby cities is compounding the crisis. The combination of low temperatures, fog, and high pollution levels is worsening public health conditions.
In Delhi-NCR and several cities across North India, temperatures have dropped to minimum levels of 8 to 12 degrees Celsius.
A thick layer of haze blanketed the city from morning hours and returned in the evening, significantly reducing visibility on roads and contributing to slower traffic movement.Health experts warn that breathing in such polluted air can have severe consequences, especially for children, the elderly, and individuals with respiratory or cardiac conditions. They advise residents to stay indoors as much as possible, avoid strenuous outdoor activities, and step out only when necessary.Delhi’s air quality deteriorates again, AQI climbs to 385 as cold wave deepens pollution crisis | MorungExpress | morungexpress.com
This is the second in a two-part series. Read part one here.
Globalisation has always had its critics – but until recently, they have come mainly from the left rather than the right.
In the wake of the second world war, as the world economy grew rapidly under US dominance, many on the left argued that the gains of globalisation were unequally distributed, increasing inequality in rich countries while forcing poorer countries to implement free-market policies such as opening up their financial markets, privatising their state industries and rejecting expansionary fiscal policies in favour of debt repayment – all of which mainly benefited US corporations and banks.
This was not a new concern. Back in 1841, German economist Friedrich List had argued that free trade was designed to keep Britain’s global dominance from being challenged, suggesting:
When anyone has obtained the summit of greatness, he kicks away the ladder by which he climbs up, in order to deprive others of the means of climbing up after him.
By the 1990s, critics of the US vision of a global world order such as the Nobel-winning economist Joseph Stiglitz argued that globalisation in its current form benefited the US at the expense of developing countries and workers – while author and activist Naomi Klein focused on the negative environmental and cultural consequences of the global expansion of multinational companies.
Mass left-led demonstrations broke out, disrupting global economic meetings including, most famously, the World Trade Organization (WTO) in 1999. During this “battle of Seattle”, violent exchanges between protesters and police prevented the launch of a new world trade round that had been backed by then US president, Bill Clinton. For a while, the mass mobilisation of a coalition of trade unionists, environmentalists and anti-capitalist protesters seemed set to challenge the path towards further globalisation – with anti-capitalism “Occupy” protests spreading around the world in the wake of the 2008 financial crash.
A documentary about the 1999 ‘batte of Seattle’, directed by Jill Friedberg and Rick Rowley.
In the US, a further critique of globalisation centred on its domestic consequences for American workers – namely, job losses and lower pay – and led to calls for greater protectionism. Although initially led by trade unions and some Democratic politicians, this critique gradually gained purchase in radical right circles who opposed giving any role to international organisations like the WTO, on the grounds that they impinged on American sovereignty. According to this view, only by stopping foreign competition whose low wages undercut American workers could prosperity be restored. Immigration was another target.
Under Donald Trump’s second term as US president, these criticisms have been transformed into radical, deeply disruptive economic and social policies – with tariffs and protectionism at their heart. In so doing, Trump – despite all his grandstanding on the world stage – has confirmed what has long been clear to close observers of US politics and business: that the American century of global dominance, with the dollar as unrivalled no.1 currency, is drawing rapidly to a close.
Even before Trump first took office in 2017, the US had begun to withdraw from its leadership role in international economic institutions such as the WTO. Now, the strongest part of its economy, the hi-tech sector, is under intense pressure from China, whose economy is already bigger than the US’s by one key measure of GDP. Meanwhile, the majority of US citizens are facing stagnant incomes, higher prices and more insecure jobs.
In previous centuries, when first France and then Great Britain reached the end of their eras of world domination, these transitions had painful impacts beyond their borders. This time, with the global economy more closely integrated than ever before and no single dominant power waiting in the wings to take over, the impacts could be felt even more widely – with very damaging, if not catastrophic, results.
Why no one is ready to take the US’s place
When it comes to taking over from the US as the world’s leading hegemonic power, the only viable candidates with big enough economies are the European Union and China. But there are strong reasons to doubt that either could take on this role – notwithstanding the fact that in 2022, then US president Joe Biden’s National Security Strategy called China: “The only competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military and technological power to do so.”
At times Biden’s successor, President Trump, has sounded almost jealous of the control China’s leaders exert over their national economy, and the fact they do not face elections and limits on their terms in office. But a one-party, authoritarian political system which lacks legal checks and balances is a key reason China will find it hard to gain the cultural and political dominance among democratic nations that is part of achieving world no.1 status – despite the influence it already wields in large parts of Asia and Africa.
China still faces big economic challenges too. While it is already the global leader in manufactured goods (rapidly moving into hi-tech products) and the world’s largest exporter, its economy is still very unbalanced – with a much smaller consumer sector, a weak property market, many inefficient state industries that are highly indebted, and a relatively small financial sector restricted by state ownership. Nor does China possess a global currency, despite its (limited) attempts to make the renminbi a truly international currency.
The Insights section is committed to high-quality longform journalism. Our editors work with academics from many different backgrounds who are tackling a wide range of societal and scientific challenges.
As I found on a reporting trip to Shanghai in 2007 to investigate the effects of globalisation, there are also enormous differences between China’s prosperous coastal megacities – whose main thoroughfares rival New York and Paris – and the relative poverty in the interior, especially in rural areas. But nearly two decades on from that visit, with the country’s growth rate slowing, many university-educated young people are also finding it hard to find well-paid jobs now.
Meanwhile Europe – the only other contender to take the US’s place as global no.1 – is deeply politically divided, with smaller, weaker economies to the east and south far more sceptical about the benefits of globalisation, and increasingly divided on issues such as migration and the Ukraine war. The challenges of achieving broad policy agreement among all member states, and the problem of who can speak for Europe, make it unlikely that the EU as currently constituted could initiate and enforce a new global world order on its own.
The EU’s financial system also lacks the heft of the US’s. Although it has a common currency (the euro) managed by the European Central Bank, its financial system is far more fragmented. Banks are regulated nationally, and each country issues its own government bonds (although a few eurobonds now exist). This makes it hard for the euro to replace the dollar as a store of value, and reduces the incentive for foreigners to hold euros as an alternative reserve currency.
Meanwhile, any future prospects of a renewal of US global leadership look similarly unpromising. Trump’s policy of cutting taxes while increasing the size of the US government debt – which now stands at US$38 trillion, or 120% of GDP – threatens both the stability of the world economy and the ability of the US to finance this mind-boggling deficit.US national debt hits record high. Video: The Economic Times.
Tellingly, the Trump administration shows no interest in reviving, or even engaging with, many of the international financial institutions which America once dominated, and which helped shape the world economic order – as US trade representative Jamieson Greer expressed disdainfully in the New York Times recently:
Our current, nameless global order, which is dominated by the WTO and is notionally designed to pursue economic efficiency and regulate the trade policies of its 166 member countries, is untenable and unsustainable. The US has paid for this system with the loss of industrial jobs and economic security, and the biggest winner has been China.
While the US is not, so far, withdrawing from the IMF, the Trump administration has urged it to call out China for running such a large trade surplus, while abandoning its concern about climate change. Greer concluded that the US has “subordinated our country’s economic and national security imperatives to a lowest common denominator of global consensus”.
World without a global no.1
To understand the potential dangers ahead, we must go back more than a century to the last time there was no global hegemon. By the time the first world war officially ended with the signing of the Treaty of Versailles on June 28 1919, the international economic order had collapsed. Britain, world leader over the previous century, no longer possessed the economic, political or military clout to enforce its version of globalisation.
The UK government, burdened by the huge debts it had taken out to finance the war effort, was forced to make major cuts in public spending. In 1931, it faced a sterling crisis: the pound had to be devalued as the UK exited from the gold standard for good, despite having yielded to the demands of international bankers to cut payments to the unemployed. This was a final sign that Britain had lost its dominant place in the world economic order.
The 1930s were a time of deep political unease and unrest in Britain and many other countries. In 1936, unemployed workers from Jarrow, a town in north-east England with 70% unemployment after its shipyards closed, organised a non-political “hunger march” to London which became known as the Jarrow crusade. More than 200 men, dressed in their Sunday best, marched peacefully in step for over 200 miles, gaining great support along the way. Yet when they reached London, prime minister Stanley Baldwin ignored their petition – and the men were informed their dole money would be docked because they had been unavailable for work over the past fortnight.
Europe was also facing a severe economic crisis. After Germany’s government refused to pay the reparations agreed in the 1919 Versailles treaty, saying they would bankrupt its economy, the French army occupied the German industrial heartland of the Ruhr and German workers went on strike, supported by their government. The ensuing struggle fuelled hyperinflation in Germany. By November 1923, it took 200,000 million marks to buy a loaf of bread, and the savings and pensions of the German middle class were wiped out. That month, Adolf Hitler made his first attempt to seize power in the failed “Beer hall putsch” in Munich.
In contrast, across the Atlantic, the US was enjoying a period of postwar prosperity, with a booming stock market and explosive growth of new industries such as car manufacturing. But despite emerging as the world’s strongest economic power, having financed much of the Allied war effort, it was unwilling to grasp the reins of global economic leadership.
The Republican US Congress, having blocked President Woodrow Wilson’s plan for a League of Nations, instead embraced isolationism and washed its hands of Europe’s problems. The US refused to cancel or even reduce the war debts owed it by the Allied nations, who eventually repudiated their debts. In retaliation, the US Congress banned all American banks from lending money to these so-called allies.
Then, in 1929, the affluent American “jazz age” came to an abrupt halt with a stock market crash that wiped off half its value. The country’s largest manufacturer, Ford, closed its doors for a year and laid off all its workers. With a quarter of the nation unemployed, long lines for soup kitchens were seen in every city, while those who had been evicted camped out wherever they could – including in New York’s Central Park, renamed “Hooverville” after the hapless US president of that time, Herbert Hoover.
In rural areas where the collapse in agricultural prices meant farmers could no longer make a living, armed farmers stopped food and milk trucks and destroyed their contents in a vain attempt to limit supply and raise prices. By March 1933, as President Franklin D. Roosevelt took office, the entire US banking system had ground to a standstill, with no one able to withdraw money from their bank account.
With its focus on this devastating Great Depression, the US refused to get involved in attempts at international economic cooperation. With no notice, Roosevelt withdrew from the 1933 London Conference which had been called to stabilise the world’s currencies – sending a message denouncing “the old fetishes of the so-called international bankers”.
With the US following the UK off the gold standard, the resulting currency wars exacerbated the crisis and further weakened European economies. As countries reverted to mercantilist policies of protectionism and trade wars, world trade shrank dramatically.
The situation became even worse in central Europe, where the collapse of the huge Credit-Anstalt bank in Austria in 1931 reverberated around the region. In Germany, as mass unemployment soared, centrist parties were squeezed and armed riots broke out between communist and fascist supporters. When the Nazis came to power, they introduced a policy of autarky, cutting economic ties with the west to build up their military machine.
The economic rivalries and antagonisms which weakened western economies paved the way for the rise of fascism in Germany. In some sense, Hitler – an admirer of the British empire – aspired to be the next hegemonic economic as well as military power, creating his own empire by conquering and ruthlessly exploiting the resources of the rest of Europe.
Troubled by rampant hyperinflation, Germans queue up with large bags to withdraw money from Berlin’s Reichsbank in 1923. Bundesarchiv/Wikimedia, CC BY-NC-SA
Nearly a century later, there are some disturbing parallels with that interwar period. Like America after the first world war, Trump insists that countries the US has supported militarily now owe it money for this protection. He wants to encourage currency wars by devaluing the dollar, and raise protectionist barriers to protect domestic industry. The 1920s was also a time when the US sharply limited immigration on eugenic grounds, only allowing it from northern European countries which (the eugenicists argued) would not “pollute the white race”.
Clearly, Trump does not view the lack of international cooperation that could amplify the damaging economic effects of a stock or bond market crash as a problem that should concern him. And in today’s unstable world, for all the US’s past failings as a global leader, that is a very worrying proposition.
How the US responded to the last financial crisis
Once again, the rules of the international order are breaking down. While it is possible that Trump’s approach will not be fully adopted by his successor in the White House, the direction of travel in the US will almost certainly remain sceptical about the benefits of globalisation, with limited support for any worldwide economic rules or initiatives.
We see similar scepticism about the benefits of globalisation emerging in other countries, amid the rise of rightwing populist parties in much of Europe and South America – many backed by Trump. Fuelling these parties’ support are growing concerns about income inequality, slow growth and immigration which are not being addressed by the current political system – and all of which would be exacerbated by the onset of a new global economic crisis.
With the global economy and financial system far bigger than ever before, a new crisis could be even more severe than the one that occurred in 2008, when the failure of the banking system left the world teetering on the brink of collapse.
The scale of this crisis was unprecedented, but key US and UK government officials moved boldly and swiftly. As a BBC reporter in Washington, I attended the House of Representatives’ Financial Services Committee hearing three days after Lehman Brothers went bankrupt, paralysing the global financial system, to find out the administration’s response. I remember the stunned look on the face of the committee’s chairman, Barney Frank, when he asked US Treasury secretary Hank Paulson and US Federal Reserve chairman Ben Bernanke how much money they might need to stabilise the situation:
“Let’s start with US$1 trillion,” Bernanke replied coolly. “But we have another US$2 trillion on our balance sheet if we need it.”
Documentary on the collapse of Lehman Brothers bank in September 2008.
Shortly afterwards, the US Congress approved a US$700 billion rescue package. While the global economy has still not fully recovered from this crisis, it could have been far worse – possibly as bad as the 1930s – without such intervention.
Around the world, governments ended up pledging US$11 trillion to guarantee the solvency of their banking systems, with the UK government putting up a sum equivalent to the country’s entire yearly GDP. But it was not just governments. At the G20 summit in London in April 2009, a new US$1.1 trillion fund was set up by the International Monetary Fund (IMF) to advance money to countries that were getting into financial difficulty.
The G20 also agreed to impose tougher regulatory standards for banks and other financial institutions that would apply globally, to replace the weak regulation of banks that had been one of the main causes of the crisis. As a reporter at this summit, I recall widespread excitement and optimism that the world was finally working together to tackle its global problems, with the host prime minister, Gordon Brown, briefly glowing in the limelight as organiser of that summit.
Behind the scenes, the US Federal Reserve had also been working to contain the crisis by quietly passing on to the world’s other leading central banks nearly US$600 billion in “currency swaps” to ensure they had the dollars they needed to bail out their own banking systems. The Bank of England secretly lent UK banks £100 billion to ensure they didn’t collapse, although two of the four major banks, Royal Bank of Scotland (now NatWest) and Lloyds, ultimately had to be nationalised (to different extents) to keep the financial system stable.
However, these rescue packages for banks, while much needed to stabilise the global economy, did not extend to many of the victims of the crash – such as the 12 million US households whose homes were now worth less than the mortgage they had taken out to pay for them, or the 40% of households who experienced financial distress during the 18 months after the crash. And the ramifications of the crisis were even greater for those living in developing countries.
A few months after the 2008 financial crisis began, I travelled to Zambia, an African country totally dependent on copper exports for its foreign exchange. I visited the Luanshya copper mine near Ndola in the country’s copper belt. With demand for copper (used mainly in construction and car manufacturing) collapsing, all the copper mines had closed. Their workers, in one of the few well-paid jobs in Zambia, were forced to leave their comfortable company homes and return to sharing with their relatives in Lusaka without pay.
Zambia’s government was forced to shut down its planned poverty reduction plan, which was to be funded by mining profits. The collapse in exports also damaged the Zambian currency, which dropped sharply. This hit the country’s poorest people hard as it raised the price of food, most of which was imported.
The ripple effects of the 2008 global financial crisis soon hit Luanshya copper mine in Zambia. Nerin Engineering Co., CC BY-SA
I also visited a flower farm near Lusaka, where Dutch expats Angelique and Watze Elsinga had been growing roses for export for over a decade – employing more than 200 workers who were given housing and education. As the market for Valentine’s Day roses collapsed, their bankers, Barclays South Africa, suddenly ordered them to immediately repay all their loans, forcing them to sell their farm and dismiss their workers. Ultimately, it took a US$3.9 billion loan from the IMF and World Bank to stabilise Zambia’s economy.
Should another global financial crisis hit, it is hard to see the Trump administration (and others that follow) being as sympathetic to the plight of developing countries, or allowing the Federal Reserve to lend major sums to foreign central banks – unless it is a country politically aligned with Trump, such as Argentina. Least likely of all is the idea of Trump working with other countries to develop a global trillion-dollar rescue package to help save the world economy.
Rather, there is a real worry that reckless actions by the Trump administration – and weak global regulation of financial markets – could trigger the next global financial crisis.
What happens if the US bond market collapses?
Economic historians agree that financial crises are endemic in the history of global capitalism, and they have been increasing in frequency since the “hyper-globalisation” of the 1970s. From Latin America’s debt crisis in the 1980s to the Asia currency crisis in the late 1990s and the US dotcom stock market collapse in the early 2000s, crises have regularly devastated economies and regions around the world.
Today, the greatest risk is the collapse of the US Treasury bond market, which underpins the global financial system and is involved in 70% of global financial transactions by banks and other financial institutions. Around the world, these institutions have long regarded the US bond market, worth over $30 trillion, as a safe haven, because these “debt securities” are backed by the US central bank, the Federal Reserve.
Increasingly, the unregulated “shadow banking system” – a sector now larger than regulated global banks – is deeply involved in the bond market. Non-bank financial institutions such as private equity, hedge funds, venture capital and pension funds are largely unregulated and, unlike banks, are not required to hold reserves.
Bond market jitters are already unnerving global financial markets, which fear its unravelling could precipitate a banking crisis on the scale of 2008 – with highly leveraged transactions by these non-bank financial institutions leaving them exposed.US bonds play a key role in maintaining the stability of the global economy. Video: Wall Street Journal.
Buyers of US bonds are also troubled by the Trump administration’s plan to raise the US deficit even higher to pay for tax cuts – with the national debt now forecast to rise to 134% of US GDP by 2035, up from 120% in 2025. Should this lead to a widespread refusal to buy more US bonds among jittery investors, their value would collapse and interest rates – both in the US and globally – would soar.
The governor of the Bank of England, Andrew Bailey, recently warned that the situation has “worrying echoes of the 2008 financial crisis”, while the head of the IMF, Kristalina Georgieva, said her worries about the collapse of private credit markets sometimes keep her awake at night.
A bad situation would grow even worse if problems in the bond market precipitate a sharp decline in the value of the dollar. The world’s “anchor currency” would no longer be seen as a safe store of value – leading to more withdrawals of funds from the US Treasury bond market, where many foreign governments hold their reserves.
A weaker dollar would also hit US exporters and multinational companies by making their goods more expensive. Yet extraordinarily, this is precisely the course advocated by Stephen Miran, chair of the US president’s Council of Economic Advisors – who Trump appears to want to be the next head of the Federal Reserve.
One example of what could happen if bond markets become destabilised occurred when the shortest-lived prime minister in UK history, Liz Truss, announced huge unfunded tax cuts in her 2022 budget, causing the value of UK gilts (the equivalent of US Treasury bonds) to plummet as interest rates spiked. Within days, the Bank of England was forced to put up an emergency £60 billion rescue fund to avoid major UK pension funds collapsing.
In the case of a US bond market crash, however, there are growing fears that the US government would be unable – and unwilling – to step in to mitigate such damage.
A new era of financial chaos
Just as worrying would be a crash of the US stock market – which, by historic standards, is currently vastly overvalued.
Huge recent increases in the US stock market’s overall value have been driven almost entirely by the “magnificent seven” hi-tech companies, which alone make up a third of its total value. If their big bet on artificial intelligence is not as lucrative as they claim, or is overshadowed by the success of China’s AI systems, a sharp downturn, similar to the dotcom crash of 2000-02, could well occur.
Jamie Dimon, head of the US’s biggest bank JPMorgan Chase, has said he is “far more worried than other [experts]” about a serious market correction, which he warned could come in the next six months to two years.
Big tech executives have been overoptimistic before. Reporting from Silicon Valley in 2001 as the dotcom bubble was bursting, I was struck by the unshakeable belief of internet startup CEOs that their share prices could only go up.
Furthermore, their companies’ high stock valuations had allowed them to take over their competitors, thus limiting competition – just as companies such as Google and Meta (Facebook) have since used their highly valued shares to purchase key assets and potential rivals including YouTube, WhatsApp, Instagram and DeepMind. History suggests this is always bad for the economy in the long run.
With the business and financial worlds now ever more closely linked, not only has the frequency of financial crises increased in the last half-century, each crisis has become more interconnected. The 2008 global financial crisis showed how dangerous this can be: a global banking crisis triggered stock market falls, collapses in the value of weak currencies, a debt crisis in developing countries – and ultimately, a global recession that has taken years to recover from.
The IMF’s latest financial stability report summarised the situation in worrying terms, highlighting “elevated” stability risks as a result of “stretched asset valuations, growing pressure in sovereign bond markets, and the increasing role of non-bank financial institutions. Despite its deep liquidity, the global foreign exchange market remains vulnerable to macrofinancial uncertainty.”The IMF has warned about instability in the global financial system. Video: CGTN America.
I believe we may be entering a new era of sustained financial chaos during which the seeds sown by the death of globalisation – and Trump’s response to it – finally shatter the world economic and political order established after the second world war.
Trump’s high and erratically applied tariffs – aimed most strongly at China – have already made it difficult to reconfigure global supply chains. Even more worrying could be the struggle over the control of key strategic raw materials like the rare earth minerals needed for hi-tech industries, with China banning their export and the US threatening 100% tariffs in return (as well as hoping to take over Greenland, with its as-yet-untapped supply of some of these minerals).
This conflict over rare earths, vital for the computer chips needed for AI, could also threaten the market value of high-flying tech stocks such as Nvidia, the first company to exceed US$4 trillion in value.
The battle for control of critical raw materials could escalate. There is a danger that in some cases, trade wars might become real wars – just as they did in the former era of mercantilism. Many recent and current regional conflicts, from the first Iraq war aimed at the conquest of the oilfields of Kuwait, to the civil war in Sudan over control of the country’s goldmines, are rooted in economic conflicts.
The history of globalisation over the past four centuries suggests that the presence of a global superpower – for all its negative sides – has brought a degree of economic stability in an uncertain world.
In contrast, a key lesson of history is that a return to policies of mercantilism – with countries struggling to seize key natural resources for themselves and deny them to their rivals – is most likely a recipe for perpetual conflict. But this time around, in a world full of 10,000 nuclear weapons, miscalculations could be fatal if trust and certainty are undermined.
The challenges ahead are immense – and the weakness of international institutions, the limited visions of most governments and the alienation of many of their citizens are not optimistic signs.
This is the second in a two-part series. In case you missed it, read part one here.
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