Black gold turns the U.S. and China into frenemies

This is Bloomberg Opinion Today, a strategic matrix of Bloomberg Opinion’s opinions. Sign up here.Today’s Agenda Energy markets remain a bat [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a strategic matrix of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Energy markets [remain a battleground](. - Robots are [struggling with ethics](. - [Increasing leverage]( may be a self-defeating investment strategy. - The morality of [making vaccines mandatory](. It’s Codependency, Not Collaboration Early in the sci-fi movie “[Arrival](,” the protagonist Dr. Louise Banks argues that the Sanskrit word for war “gavisti” translates as “a desire for more cows.” A modern twist on the tale would make that “a desire for more oil.” Energy dependency has sparked and resolved wars in recent decades, David Fickling writes. Cutting off German supplies of nitrate fertilizers with a naval blockade helped Britain triumph in World War I. Japan weaned itself off American oil by subjugating other Southeast Asian nations, while the oilfields of the Caucasus were a key target in Germany’s invasion of Russia under Adolf Hitler. Currently, China’s dependence on imports to satisfy almost three-quarters of its oil needs makes [the Gulf region a potential flashpoint with the U.S.]( Who controls Asia’s supply lines from the Middle East is of vital strategic importance for the entire region. While the U.S. and China have both agreed to tap their strategic petroleum reserves to ease what the International Energy Agency calls [“artificial tightness”]( in global energy markets, David argues that it’s an uneasy alliance born of necessity. “The alternative to cooperation, however, is far worse,” he writes. A Turing Test for Ethics The test, named for Cambridge mathematician Alan Turing, is designed to assess whether artificial intelligence systems are worthy of the appellation by measuring how convincing they are in mimicking human responses. But what if the chatbots turn out to be racist misogynists? The leading AI companies[aren’t paying nearly enough attention to ethics](, according to Parmy Olson. In the race to build computers that can outperform humans in spatial, mechanical and verbal tasks, shortcuts in both the data sets used to train the software and oversight of the systems lead to undesirable consequences, such as a restaurant booking application that decided Serbians are immature and Polish people like their alcohol a bit too much. Hiring more ethics researchers in AI development teams is one solution. Producing cleaner data sets, rather than relying on real-world chatrooms where sexism and other forms of discrimination unfortunately still abound, is another. And, as Parmy points out, the issue runs deeper than the risk of an automated voice program coming up with a crass reply: “If software designers can’t tell how a chatbot came up with a rude joke, how might they investigate high-stakes systems that crash cars or make bad lending decisions?” FOMO Can Lead to Risky Bets California Public Employees’ Retirement System is worried about missing its long-term target of generating 6.8% in annual returns to be able to pay the pensions of thousands of workers. So the $495 billion pension fund, known as Calpers, plans to leverage itself by taking on as much as $25 billion in debt to juice its returns. That strikes Paul J. Davies as [a risky strategy](. Leverage upon leverage is flooding the markets with money, in turn depressing returns for everyone and making the problem even worse. In the U.S. stock market, for example, net borrowing on margin in brokerage accounts reached a record $509 billion last month. Banks are at the bottom of the leverage pyramid, providing the loans that stock investors, buyout firms and almost all of the players in the financial system are using in an effort to generate more alpha. The risk is that an interest rate shock next year — which strategists are increasingly penciling in to their list of known unknowns for 2022 — leaves the banking system with a pile of deteriorating collateral that proves hard to sell. When Responsibility Trumps Conviction In 1919, the German sociologist Max Weber outlined what he saw as the difference between the “ethic of conviction” and the “ethic of responsibility.” The former prioritizes ideological purity above all other considerations; bad outcomes are the fault of the universe or God, not the policy maker. The latter, on the other hand, takes account of both unintended and unpredictable consequences in shaping decisions. For Andreas Kluth, that argument would have prompted Weber to favor[mandatory vaccinations as a public policy](to slow the resurgence of the pandemic. While a liberal mindset might recoil at taking away personal choice about getting jabbed, coercion beats the consequences of allowing anti-vaxxers the freedom to infect others. “It appears that there’s no way around vaccine mandates in some parts of the world if we ever want to defeat this virus,” Andreas writes. Further Reading Will the Chinese public ever accept [genetically modified food?]( — Adam Minter Ford and Rivian decide to [consciously uncouple](. — Anjana Trivedi When[due diligence gets in the way](of generating alpha. — Shuli Ren ICYMI Sweden’s new prime minister resigned after just eight hours. [What happens next?]( [Last orders](? Finland may halt alcohol sales at 5 p.m. to curb the coronavirus. China warns incoming German administration [not to meddle over Taiwan](. Kickers [When Harry Met Santa](. Norway’s postal service has a heartwarming Christmas video. (h/t Lara Williams) The metaverse is [“the internet in realtime 3D”](. (h/t Eric Balchunas) [A postcard from Mars](. Like Chinese food? [Like it enough to visit 8,000 Chinese restaurants?]( Notes:  Please send sweet and sour pork and complaints to Mark Gilbert at magilbert@bloomberg.net. [Sign up here]( and follow us on [Twitter]( and [Facebook](. Like Bloomberg Opinion Today? [Subscribe to Bloomberg All Access and get much, much more](. You’ll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. 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